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Regulation and Distrust

  • 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 - (-))

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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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. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2000. "The Role of Social Capital in Financial Development," CRSP working papers 511, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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  3. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
  4. Guido Tabellini, 2006. "Culture and institutions: economic development in the regions of Europe," Levine's Working Paper Archive 321307000000000241, David K. Levine.
  5. Yann Algan & Pierre Cahuc, 2009. "Civic Virtue and Labor Market Institutions," Sciences Po publications info:hdl:2441/8812, Sciences Po.
  6. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2002. "People's Opium? Religion and Economic Attitudes," CEPR Discussion Papers 3588, C.E.P.R. Discussion Papers.
  7. Alesina, Alberto, et al, 2003. " Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-94, June.
  8. Simeon Djankov & Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2003. "The New Comparative Economics," NBER Working Papers 9608, National Bureau of Economic Research, Inc.
  9. Edward Glaeser & Giacomo Ponzetto & Andrei Shleifer, 2007. "Why does democracy need education?," Journal of Economic Growth, Springer, vol. 12(2), pages 77-99, June.
  10. Leonard Wantchekon & Nathan Nunn, 2009. "Trans-Atlantic Slave Trade and the Origins of Mistrust in Africa," 2009 Meeting Papers 34, Society for Economic Dynamics.
  11. Simeon Djankov & Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2002. "The Regulation Of Entry," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 1-37, February.
  12. Aghion, Philippe & Algan, Yann & Cahuc, Pierre, 2008. "Can Policy Influence Culture? Minimum Wage and the Quality of Labor Relations," CEPREMAP Working Papers (Docweb) 0801, CEPREMAP.
  13. Tabellini, Guido, 2007. "Culture and Institutions," CEPR Discussion Papers 6589, C.E.P.R. Discussion Papers.
  14. Rafael La Porta & Florencio Lopezde-Silanes & Andrei Shleifer, 2000. "Government Ownership of Banks," NBER Working Papers 7620, National Bureau of Economic Research, Inc.
  15. Persson, Torsten & Tabellini, Guido, 1999. "Political Economics and Public Finance," CEPR Discussion Papers 2235, C.E.P.R. Discussion Papers.
  16. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 811-846, August.
    • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  17. Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers.
  18. Yann Algan & Pierre Cahuc, 2007. "Social Attitudes and Economic Development : an Epidemiological Approach," Sciences Po publications 6403, Sciences Po.
  19. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2008. "Social Capital as Good Culture," CEPR Discussion Papers 6657, C.E.P.R. Discussion Papers.
  20. 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.
  21. Edward L. Glaeser & Andrei Shleifer, 2001. "Legal Origins," Harvard Institute of Economic Research Working Papers 1920, Harvard - Institute of Economic Research.
  22. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
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  24. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
  25. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
  26. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  27. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2007. "The Economic Consequences of Legal Origins," NBER Working Papers 13608, National Bureau of Economic Research, Inc.
  28. John F. Helliwell & Robert D. Putnam, 1999. "Education and Social Capital," NBER Working Papers 7121, National Bureau of Economic Research, Inc.
  29. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August.
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  31. repec:spo:wpecon:info:hdl:2441/8814 is not listed on IDEAS
  32. repec:spo:wpecon:info:hdl:2441/8813 is not listed on IDEAS
  33. 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.
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