The Impact of Welfare State Development on Social Trust Formation: An Empirical Investigation

Social trust is shaped by many society-level as well as individual-level factors. One of the determinants highly debated in literature is the welfare state which reflects the level of state intervention in organizing individuals’ welfare. Theoretical as well as empirical studies are in their vast majority controversial with respect to the kind of effects welfare state may have on social trust formation. However, all of them have one element in common – they measure welfare state development through social spending. The main objective of this research consists of demonstrating that in order to precisely estimate this impact, it is necessary to introduce a new operationalization for welfare state development which would reflect the outcomes rather than the process of the state intervention into individuals’ arrangements. The latter can be obtained by decomposing Esping-Andersen’s welfare regime typology and directly evaluating the effects of decommodification and stratification on social trust indexes. This hypothesis is checked based on a cross-sectional analysis for a set of 18 OECD countries while using multi-level modelling as the main research method. The individual-level analysis demonstrates that decommodification enhances trust formation. The aggregated-level analysis allows for explaining that this positive effect of decommodification on social trust mainly goes through reduction of income inequality which is the key aim of social policies. Moreover, the analysis demonstrates that the quality of public institutions, in general, and welfare institutions, in particular, conducts essential influence on the level of trust in the societies. Besides decommodification, the form of social stratification was found to matter for social trust. Preserving existing class structure inherent to conservative welfare regime type influences negatively institutional trust, but positively interpersonal trust. Stigmatizing approach apt to liberal welfare state erodes interpersonal trust, but boosts institutional trust. Finally, socialism’s universal approach leads to crowding-in effects in both forms of social trust.