Presentation by Yann Algan at the OECD Workshop on “Joint Learning for an OECD Trust Strategy” on 14 October 2013. Mr. Algan discusses the relationships between institutions, inequality/segmentation and trust. He also examines how to identify impact of policy on trust.

1. Public
Policy
and
Trust
Yann
Algan
Sciences
Po
OECD
October
14th

2. Introduc>on
• Large
evidence
of
a
rela>onship
between
– Ins>tu>ons
and
trust:
rule
of
law,
transparency
….
– Inequality,
segmenta>on
…and
trust
See
survey
Algan
and
Cahuc,
Handbook
of
Economic
Growth,
2013
• How
can
we
iden>fy
the
impact
of
policy
on
trust
?
– Regula>on
and
Distrust….
– School
and
Social
Capital

4. I
-­‐Regula>on
and
Distrust
Distrust and regulation of product market
3
R ² = 0 .3 2
UGA
BRA
Regulation of entry
1.5
2
2.5
CH N
ID N
VEN
UKR RC
G
PH L
JOR
ARG
D ZA
EGY
RUS
TU R
TZA
VNM
HRV
J P N IN D
P AB G R
K
M A R P RT
E SK O R
P
P O LG A S V K
C ZE
N
ZW R
PEE
D EI U A
T
M E X C HZ S V N
LA F
A U T L T U BF R A
GD
N LD
BEL
U S AE B R
CH G
SG P
HU N
ROM
N OR D NK
LV A
IR L
1
S W EF I N
.5
AUCAN
S
.2
.4
.6
D is t r u s t
.8
Source:
Aghion,
Algan,
Cahuc,
Shleifer:
Regula>on
and
Distrust
QJE
2010
9
1

5. 80
Distrust and regulation of labor market
VEN
R ² = 0 .1 1
Rigidity of Employment Index
20
40
60
ROM
F IN
NOR
SW E
TZA
MAR
SVN
ESP
GF R A
RC
PER
P RT
D ZA
H RL V A
V
LT U X
ME
DEU RUS
ZA F
BRA
IN D
UKR ARG
VNM
I TPR K P O L
AA
TU RZW E
KO
SVK
PH L
A UT HU N
JOR BGD
BGR
EGY
BEL C ZE
CHL
CHE
ID N
N LD
CH N
AUS
JP N
IR L
NGA
D NK
0
CAN
US A
.2
.4
GBR
.6
D istr u s t
10
UGA
SG P
.8
1

6. Distrust, Civicness and Flexisecurity
.8
R²=0.36
Expenditure per unemployed
.2
.4
.6
Dk
Nth
Bg
Swd
Aut
Switz
Fra
Ire
Ger
Sp
Pt
Pol
Gre
Cd
Hg
Jp
Nw
Aus
Ita
Uk
Usa
Czr
0
Mx
-.6
-.4
-.2
Civic attitudes: marginal country effect
WVS and OECD databases 1980-2000
12
0

7. Demand
for
regula>on
Distrust and Political support for Regulation: Micro evidence
Distrust
others
Distrust legal
system
Distrust civil
servants
Distrust
companies
.027***
(.010)
114722
.025***
(.007)
93406
.013**
(.006)
111113
.139**
(.006)
111113
(2) Government should
control firms
.097***
(.014)
26978
.022*
(.013)
26919
.020*
(.011)
26594
.023***
(.019)
13318
(3) Government should
take more responsibility
N
.039***
(.006)
129393
.018**
(.006)
123798
.015**
(.006)
123798
.088**
(.006)
120807
(3) In democracies the economic
system runs badly
N
.134***
(.009)
76061
.081***
(.010)
47542
.082***
(.008)
74288
.053***
(.009)
65011
(1) Competition is harmful
N
Source: WVS - Controls: country fixed e ects, gender, age, education, income, political a liation
Robust standard error with clustering at the country level. ***:1%, **: 5%, *: 10.
19

8. The
Side
effects
of
Deregula>on
in
Low
Social
capital
environment:
ex
of
Transi>on
Economies
Changes in social capital between 1990 and 2000: WVS
0,14
0,12
Change in OECD countries
Change in Transition economies
0,1
0,08
0,06
0,04
0,02
0
Distrust in others
Distrust in civil servants
-0,02
-0,04
-0,06
29
Distrust in Business

9. Change in corruption: WVS 1990 and 2000
0,1
Change in OECD countries
Change in Transition economies
0,08
0,06
0,04
0,02
0
Justifiable to accept bribes
Justifiable to cheat on taxes
-0,02
-0,04
-0,06
30

10. Change in demand for regulation: WVS 1990 and 2000
1,2
Change in OECD countries
Change in Transition economies
1
0,8
0,6
0,4
0,2
0
Competition is harmful
Government should run business
31

11. Changes in civic education between 1990 and 2000
0,06
Change in OECD countries
Change in Transition economies
0,04
0,02
0
Education Respect and Tolerance
Education Unselfishness
-0,02
-0,04
-0,06
-0,08
35

12. State regulation and civil society: how to build a virtuous circle
Source,
Aghion,
Algan
and
Cahuc,
JEEA
2011

14. Cha`er
Lessons
from
Private
Sector
• Trust
and
Horizontal
Organiza>on
Bloom
and
Van
Reenen
(2011)
&
Algan,
Cahuc
et
Shleifer
(2013):
4,000
firms
General
Index
of
Decentraliza>on
of
decisions
between
Central Head Quarter (CHQ) and plants:
«
How
are
decisions
taken
on
new
product
introduc>ons?
At
the
plant
?
CHQ?
Both
?»
«
How
much
of
sales
and
marke>ng
is
carried
out
at
the
plant
level
?
»…
14

15. Cha`er
Bloom
and
Van
Reenen
(2013):
Rela>onship
between
decentraliza>on,
produc>vity
and
trust
Decentralization of decisions within firms
3
4
5
6
R-sq=0.37
Sweden
Denmark
Netherlands
Norway
Germany
Luxembourg
Belgium
Austria
Singapore
South Estonia
Africa
Puerto Rico
Brazil
Philippines
France
USA
Switzerland
Finland
Canada
Australia
UK Japan
Ireland
Egypt
India
Indonesia
Chile Jordan Spain
Israel
Nigeria
Tanzania
Peru
Zimbabwe Argentina
Poland
Portugal
Korea
Lesotho
Mexico
Vietnam
Romania
Botswana
Pakistan
Malawi
Zambia
Greece
Turkey
Venezuela
Morocco
Ukraine
Uganda
Hungary
Bulgaria
Italy
Mali
Banglades
China
Algeria
0
.25
.5
Generalized Trust, country average
.75
15
!

16. Cha`er
Decentraliza>on
and
Firm
Size
16

17. II-­‐
Educa>on
and
Trust
Show
the
rela>onship
between
teaching
prac>ces
and
social
capital,
across
countries,
schools
and
within
classrooms
Ver%cal
versus
Horizontal
Teaching
Methods

18.
Varia>on
in
Teaching
prac>ces
Country
level
(CES)
3.5
Average
answers
for
“Lecture”
and
“Groups”
Teacher lectures - CES
2
2.5
3
ROM
RUS
ITA
CYP
BGR
GRC
PRT
CZE
HUN
NOR
EST LVA FIN
USA
SWE
AUS
LTU
SVK
DNK
SVN
GBR
BEL
1.5
DEU
2
2.2
CHE
2.4
2.6
Students works in groups - CES
2.8
3
!

19.
Varia>on
in
Teaching
prac>ces
Country
level
(TIMSS)
JPN
3.5
TUR
Take notes from the board - TIMSS
2.5
3
FRA
GRC
IRL
SVN
AUT
BEL
RUS
HUN CZE
DEU
KOR
HKG
PRT
LVA
BGR
ROM
ISR
FIN
USA
AUS
ITA
ESP
GBR
LTU
SGP
SVK
CAN
CHE
DNK
ISL
SWE
2
NLD
NOR
1
1.5
2
Students works in groups - TIMSS
2.5
!

20. R=0.31
NW
.6
SWD
FIN
DNK
NLD
IDN
AUS
Generalized Trust
.2
.4
CD
USA
CHE
ISL
UK
JPN
IRE
SP DEU
ITA
BUL
LTU
ISR
SVK
KOR
AUT
BEL
RUS
HG
CZR
GRC
LVA
PRT
SVN
TUR
0
SGP
ROM
FRA
0
.5
1
1.5
Gap between Vertical and Horizontal Teaching
2

21.
Across
Schools
varia>on
•
-­‐
-­‐
•
-­‐
-­‐
“
Coopera>on
among
students”
Increase
by
1
point
in
“Students
work
in
group”:
2.1
%
of
the
standard
devia>on
in
the
index
“Coopera>on
among
students”
Increase
by
1
point
in
“Teacher
lectures”:
2.2%
of
the
standard
devia>on
“Coopera>on
between
students
and
teachers”
Increase
by
1
point
in
“Students
work
in
group”:
3.6
%
of
the
standard
devia>on
in
the
index
“Coopera>on
between
students
and
teachers”
Increase
by
1
point
in
“Teacher
lectures”:
1.6%
of
the
standard
devia>on

22. Within
school
varia>on