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Regulation and Distrust

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  • Philippe Aghion

    (Department of Economics, Harvard University - (-))

  • Yann Algan

    (OFCE - Centre de recherche en économie de Sciences Po - Sciences Po)

  • Pierre Cahuc

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

  • Andrei Shleifer

    (Department of Economics, Harvard University - (-))

Abstract

In a cross-section of countries, government regulation is strongly negatively correlated with social capital. We document this correlation, and present a model explaining it. In the model, distrust creates public demand for regulation, while regulation in turn discourages social capital accumulation, leading to multiple equilibria. A key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt. We test this and other implications of the model using country- and individual-level data on social capital and beliefs about government's role, as well as on changes in beliefs and in trust during the transition from socialism.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00396268.

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Date of creation: 17 Jun 2009
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Handle: RePEc:hal:wpaper:hal-00396268

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  1. Andrei Shleifer & Simeon Djankov & Edward L. Glaeser & Rafael La Porta & Florencio Lopez de Silanes, 2003. "The New Comparative Economics," Yale School of Management Working Papers, Yale School of Management ysm355, Yale School of Management.
  2. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2000. "The Role of Social Capital In Financial Development," CEPR Discussion Papers 2383, C.E.P.R. Discussion Papers.
  3. Carlin, Bruce Ian & Dorobantu, Florin & Viswanathan, S., 2009. "Public trust, the law, and financial investment," Journal of Financial Economics, Elsevier, vol. 92(3), pages 321-341, June.
  4. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 15(1), pages 222-79, April.
  5. Edward Glaeser & Giacomo Ponzetto & Andrei Shleifer, 2006. "Why Does Democracy Need Education?," NBER Working Papers 12128, National Bureau of Economic Research, Inc.
  6. Rafael La Porta & Florencio Lopezde-Silanes & Andrei Shleifer, 2000. "Government Ownership of Banks," NBER Working Papers 7620, National Bureau of Economic Research, Inc.
  7. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2002. "People's Opium? Religion and Economic Attitudes," CEPR Discussion Papers 3588, C.E.P.R. Discussion Papers.
  8. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers 2646, C.E.P.R. Discussion Papers.
  9. Nick Bloom & Raffaella Sadun & John Van Reenen, 2009. "The organization of firms across countries," LSE Research Online Documents on Economics 25481, London School of Economics and Political Science, LSE Library.
  10. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659 Elsevier.
  11. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andre Shleifer, 2000. "The Regulation of Entry," Harvard Institute of Economic Research Working Papers 1904, Harvard - Institute of Economic Research.
  12. Alberto Alesina & Arnaud Devleeschauwer & William Easterly & Sergio Kurlat & Romain Wacziarg, 2003. "Fractionalization," NBER Working Papers 9411, National Bureau of Economic Research, Inc.
  13. Edward L. Glaeser & Andrei Shleifer, 2001. "The Rise of the Regulatory State," NBER Working Papers 8650, National Bureau of Economic Research, Inc.
  14. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 551-84, August.
  15. Yann Algan & Pierre Cahuc & Philippe Aghion, 2008. "Can Policy influence culture? Minimum Wage and the Quality of Labor relations," 2008 Meeting Papers 574, Society for Economic Dynamics.
  16. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
  17. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1203-50, November.
  18. Guido Tabellini, 2005. "Culture and Institutions: economic development in the regions of Europe," Working Papers 292, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  19. Torsten Persson & Guido Tabellini, 1997. "Political Economics and Macroeconomic Policy," NBER Working Papers 6329, National Bureau of Economic Research, Inc.
  20. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(4), pages 1193-1229, November.
  21. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  22. Augustin Landier & David Thesmar & Mathias Thoenig, 2008. "Investigating capitalism aversion," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 23, pages 465-497, 07.
  23. Algan, Yann & Cahuc, Pierre, 2007. "Social Attitudes and Economic Development: An Epidemiological Approach," CEPR Discussion Papers 6403, C.E.P.R. Discussion Papers.
  24. John F. Helliwell & Robert D. Putnam, 1999. "Education and Social Capital," NBER Working Papers 7121, National Bureau of Economic Research, Inc.
  25. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "Social Capital as Good Culture," Economics Working Papers ECO2007/57, European University Institute.
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  27. Leonard Wantchekon & Nathan Nunn, 2009. "Trans-Atlantic Slave Trade and the Origins of Mistrust in Africa," 2009 Meeting Papers, Society for Economic Dynamics 34, Society for Economic Dynamics.
  28. Tabellini, Guido, 2007. "Culture and Institutions," CEPR Discussion Papers 6589, C.E.P.R. Discussion Papers.
  29. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1251-88, November.
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  31. Andrei Shleifer, 1996. "Government in Transition," Harvard Institute of Economic Research Working Papers 1783, Harvard - Institute of Economic Research.
  32. Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Market Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 111-45, January.
  33. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Trust in Large Organizations," NBER Working Papers 5864, National Bureau of Economic Research, Inc.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Regulation, distrust, morale, intrinsic and extrinsic motivation
    by Nicholas Gruen in Club Troppo on 2009-01-19 03:49:08
  2. Links 1/2/2011
    by Liam Delaney in Geary Behaviour Centre on 2011-02-01 15:43:00
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