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Public Policy and Trust

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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.

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Public Policy and Trust

  1. 1. Public  Policy  and  Trust     Yann  Algan        Sciences  Po       OECD    October  14th    
  2. 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      
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. State regulation and civil society: how to build a virtuous circle Source,  Aghion,  Algan  and  Cahuc,  JEEA  2011  
  12. 12. 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  
  13. 13. 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   !
  14. 14. Cha`er   Decentraliza>on  and  Firm  Size   16  
  15. 15. 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  
  16. 16.    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 !
  17. 17.    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 !
  18. 18. 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
  19. 19.        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  
  20. 20. Within  school  varia>on  

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