Working Paper No. 1152

The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions

Published: February 2, 2017Pages: 51Keywords: Reforms; Liberalization; Social trust; Ideology; Fractionalization; Coalition governmentJEL-codes: H11; P11; P48; Z13

The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions Niclas Berggren and Christian Bjørnskov


Social trust has been identified as a catalyst for reforms. We take the literature further in two ways.

First, we make a fine-grained analysis of mechanisms through which social trust enables liberalizing reforms – by strengthening the ability to overcome obstacles in the political process (stemming from ideology, ideological fractionalization, coalition government, minority government and legislature-seat instability).

Second, we define reforms as distinct changes in the quality of the legal institutions and in the scope of regulation and separate reforms that increase economic freedom in these two areas from reforms that decrease it. We study separately how social trust, interacted with the different types of political hindrances, affects the probability of reforms.

We find a dual role of social trust in the political process – facilitating liberalizing reforms and making de-liberalizing ones more difficult. This result suggests that trust does not make agreement on any reform more probable – the content of the reform matters.

Other research shows that trust is associated with a positive view of market actors, which indicates that only reforms that strengthen the market economy are more easily agreed upon in the presence of trust.

Niclas Berggren

Contact

Ph: +46 8 665 4520
niclas.berggren@ifn.se

Christian Bjørnskov

Contact

Ph: +45 87 16 48 19
Mob: +45 20 12 03 84
chbj@econ.au.dk

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

Sick of Inequality.jpg

In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?

Events

Seminars organized by IFN

 

To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se