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 …

labor markets, even though regulation generates lower employment and income. Empirically, we do find that individuals who … for labor market regulation. Both results suggest that labor market regulations have deep cultural roots …