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Regulation and Distrust

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

Sciences Po publications from Sciences Po

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
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Published in The Quarterly journal of economics, 2010, vol. 125, pp.1015-1049

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Related works:
Journal Article: Regulation and Distrust (2010) Downloads
Working Paper: Regulation and Distrust (2010) Downloads
Working Paper: Regulation and Distrust (2009) Downloads
Working Paper: Regulation and Distrust (2009) Downloads
Working Paper: Regulation and Distrust (2009) Downloads
Working Paper: Regulation and Distrust (2009) Downloads
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