Regulation and Distrust

Philippe Aghion (), Yann Algan, Pierre Cahuc and Andrei Shleifer ()
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Philippe Aghion: Harvard University
Andrei Shleifer: Harvard University

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

Keywords: Economic regulation; Measures of trust; Government regulation (search for similar items in EconPapers)
Date: 2010-08
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03384665v1
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Citations: View citations in EconPapers (346)

Published in Quarterly Journal of Economics, 2010, 125 (3), pp.1015 - 1049. ⟨10.1162/qjec.2010.125.3.1015⟩

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Related works:
Journal Article: Regulation and Distrust (2010)
Working Paper: Regulation and Distrust (2010)
Working Paper: Regulation and Distrust (2010)
Working Paper: Regulation and Distrust (2009)
Working Paper: Regulation and Distrust (2009)
Working Paper: Regulation and Distrust (2009)
Working Paper: Regulation and Distrust (2009)
Working Paper: Regulation and Distrust (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03384665

DOI: 10.1162/qjec.2010.125.3.1015

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