Trust no more?. On the lasting effects of corruption scandals

Abstract

We examine whether the break out of a corruption scandal involving the incumbent undermines trust in government, and whether this effect fades in the short term or whether it has lasting effects. We use a novel dataset with information on local corruption scandals occurring in Spain in the period 1999-2009, and data on the level of trust expressed in local politicians, obtained from a survey conducted in 2009. We find that corruption scandals have a marked effect both on levels of trust in local politicians and on perceptions of corruption. We also show that, while these perceptions gradually revert back to their pre-scandal levels, the effect on trust is more persistent. Using a mediation analysis we show that other side effects of corruption (including, government fragmentation and fiscal stress) are responsible for the persistence of the effect on trust.