%0 Journal Article %J Quarterly Journal of Economics %D 2010 %T Regulation and Distrust %A Philippe Aghion %A Yann Algan %A Pierre Cahuc %A Andrei Shleifer %X

We document that, in a cross section of countries, government regulation is strongly negatively correlated with measures of trust. In a simple model ex- plaining 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.

%B Quarterly Journal of Economics %V 125 %P 1015-1049 %G eng %N 3