Parental Divorce and Other Determinants of Interpersonal Trust: Evidence from HILDA Panel Data

Abstract

This paper examines the determinants of interpersonal trust with an emphasis on parental divorce using Australian HILDA panel data. The dependent variable is composed of answers to the statement: ‘Generally speaking, most people can be trusted’. The analysis is conducted using random effects ordered probit and correlated random effects ordered probit. Mother’s higher education is a strong positive determinant for trust for daughters while father’s education matters for sons. A working father when the respondent was age 14 is a strong positive determinant for both men and women. An immigrant mother is a negative determinant of trust for both men and women. Residential stability has a strong positive effect for men’s interpersonal trust. The results also indicate that there is some correlation between the level of interpersonal trust and parental divorce for both men and women. However, the effect is not strong enough for the ‘divorce revolution’ to account for the overall lower societal trust in Australia.