This chapter explores the factors that operate at a societal level to build or destroy social trust. The analysis is based on unique data about the quality of public institutions at the regional level within the EU, and the authors test the tenability of four common explanations for variations in social trust: economic inequality, ethnic diversity, the quality of public institutions, and the degree of political participation by citizens. The analysis shows that the quality of public institutions is the strongest factor underlying regional variations in trust within countries. Economic inequality also proves to be a factor to be reckoned with for explaining variations in social trust. By contrast, the degree of ethnic diversity and the extent to which citizens participate politically have less importance for variations in trust. The overall conclusion is that increasing the quality of public institutions should have first priority if our aim is to reduce the prosperity gap between countries and regions in Europe.
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