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Regulation and distrust

Aghion, P.; Algun, Y.; Cahuc, P.; Shleifer, A.; (2009) Regulation and distrust. (NBER Working Papers 14648). National Bureau of Economic Research: Cambridge, US. Green open access

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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.

Type: Working / discussion paper
Title: Regulation and distrust
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.nber.org/papers/w14648
Language: English
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/17763
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