Decentralization and Trust in Government: Quasi-experimental Evidence from Ukraine

Can decentralization of political powers increase trust in government? We present quasi-experimental evidence from Ukraine where political trust has been among the lowest levels worldwide. The national government devolved powers and resources to newly formed local governments (hromadas) between 2015 and 2020; this includes a substantial share of taxes on local incomes. We exploit local differences in the timing of the decentralization reform. Difference-in-differences estimations show that citizens in decentralized communities report more trust in local authorities and participate more often in local elections. The most likely mechanism is the democratic process of coming together to build new local communities. Local trust however does not spill over to trust in national institutions. The results may explain the strong role of hromadas in Ukraine’s resilience against the detrimental effects of the Russian invasion.