Regulation and Distrust

By Philippe Aghion, Yann Algan, Pierre Cahuc, A. Shleifer. 2010

905 citations recorded by the source corpus.

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.

Subfields: Demography, Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/b0389a96bba31baae26952e18715610ee8f6e333

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Citations in the corpus

War Signals: A Theory of Trade, Trust and Conflict (2011, neutral): “Also related to our research are the recent papers by Aghion et al. (2010) and Aghion, Algan and Cahuc (2011) focusing on the relation between public policy, on 8See also the recent advertising campaign of HSBC branded "Never underestimate the importance of local knowledge", emphasizing the…”
Inherited Trust and Growth (2010, background): “(2010) and Aghion et al. (2010) show that some political and economic institutions might have crowded out trust in European countries relative to Nordic countries.”
Is trust the missing root of institutions, education, and development? (2013, background): “We have tested all effects in the full sample, yet several recent theoretical contributions indicate that the importance of trust may vary systematically across countries (Zak and Knack, 2001; Aghion et al., 2010).”
Trust, Growth and Well-Being: New Evidence and Policy Implications (2013, neutral): “More generally, Aghion et al. (2010) highlight a steep decline of trust in the former Soviet bloc countries at the time of their conversion to "capitalism."”
Labor Market Regulations: What Do We Know About Their Impacts in Developing Countries? (2014, neutral): “For example, Algan and Cahuc (2006) and Aghion et al. (2010) demonstrate that the level of trust and civic virtue inversely affect a society’s demand for labor market regulation.”
Civil Society And The State: The Interplay Between Cooperation And Minimum Wage Regulation (2011, background): “Key words: Quality of labor relations, trade unions, minimum wage,”
Teaching Practices and Social Capital (2013, neutral): “…and Keefer 1997; Algan and Cahuc 2010), formation of large firms and organizations (La Porta et al. 1997), financial development (Guiso, Sapienza, and Zingales 2004), trade (Guiso, Sapienza, and Zingales 2009), as well as methods of state intervention (Djankov et al. 2003; Aghion et al. 2010).”
Family Values and the Regulation of Labor (2015, positive): “According to equation (2), this requires that: Assumption 1: Δ(1/2) > 1 2 .”
Trust and Wellbeing (2010, neutral): “…Fukayama 1995, Helliwell and Putnam 1995, Helliwell 1996, Knack and Keefer 1997, Knack 2001, Zak and Knack 2001) and institutional development (Aghion et al. 2010, Bergh and Bjørnskov 2009, Bjørnskov 2010a, Knack 2002), with some attention paid also to www.internationaljournalofwellbeing.org…”
Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany (2012, neutral): “Aghion et al. (2010) look at the extent to which trust can be modified by regulatory intervention.”
Culture, Institutions, and the Wealth of Nations (2017, neutral): “Aghion et al. (2008) found a negative correlation between trust and the level of regulation in societies. Guiso et al. (2003, 2009) examined the effect of trust on economic attitudes and international trade patterns, and Giuliano et al. (2006) investigated the link between geography, genetic”
When Firms Talk, Do Investors Listen? The Role of Trust in Stock Market Reactions to Corporate Earnings Announcements (2012, methodology): “…as a substitute for formal institutions at the country level (Guiso, Sapienza, and Zingales (2004), Carlin, Dorobantu, and Viswanathan (2009), and Aghion et al. (2010)), less educated people rely more on trust in making economic decisions (Guiso, Sapienza, and Zingales (2008, 2009), and trust…”
The French Unhappiness Puzzle: The Cultural Dimension of Happiness (2014, positive): “A recent paper by Algan et al. (2011) uses the fourth wave of the ESS and qualifies Luttmer’s result by showing that the inherited part of preferences for redistribution is larger for 1 generations immigrants than it is for second-generation immigrants.”
Entrepreneurship Amid Concurrent Institutional Constraints in Less Developed Countries (2016, background): “Thus, with ineffective or corrupt governance systems and lacking property rights regimes within LDCs, formal institutions fail to promote enterprise (Aghion et al., 2010; Khoury & Peng, 2011; La Porta, Lopez-de-Silanes, Schleifer, & Vishny, 1999).”