TY  - JOUR
AU  - Aghion,Philippe
AU  - Algan,Yann
AU  - Cahuc,Pierre
AU  - Shleifer,Andrei
TI  - Regulation and Distrust
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14648
PY  - 2009
Y2  - January 2009
UR  - http://www.nber.org/papers/w14648
L1  - http://www.nber.org/papers/w14648.pdf
N1  - Author contact info:
Philippe Aghion
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, MA 02138
Tel: 617/495-6675
Fax: 617/495-4341
E-Mail: paghion@fas.harvard.edu

Yann Algan
Department of Economics
Sciences Po
75007 Paris, France
28 rue des Saints-Pères 75007 Paris
France
E-Mail: yann.algan@sciences-po.org

Pierre Cahuc
Ecole  Polytechnique
91128 Palaiseau Cedex, France
Tel: (33)1 41 17 37 17
E-Mail: cahuc@ensae.fr

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB  - 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.
ER  -