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The Institutional Origin of Social Trust: The Configuration of Social Policies and The Coordination of Interests in Rich Democracies. Cheol-Sung Lee University of Chicago. Overall Research Agenda I. Dissertation (Completed in 2005) - PowerPoint PPT Presentation
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The Institutional Origin of Social Trust:
The Configuration of Social Policies and The Coordination of Interests in Rich Democracies
Cheol-Sung LeeUniversity of Chicago
Overall Research Agenda I
Dissertation (Completed in 2005)
The Social Bases and Outcomes of Welfare States in the Era of Globalization and Post-Industrial Economy
“Income Inequality, Democracy, and Public Sector Size” (ASR 2005)
“Income Inequality, Global Economy, and the State” (SF 2007)
An Inverted U-shaped Relationship between Public Sector Size and Income Inequality in 64 Countries, 1970 to 1994
4 4
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4 4
54
47 38 7
36
31
42 36 42
15
15
42 36
42
36
42 36 36 36 36 36
15
64 19
29 42
15 63
42 42
77
64
42 42 42 42 59 42
15 15
42
80 63
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29
61 29 42
19
29 61
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20
30
40
50
60 In
com
e I
ne
qu
alit
y (G
ini)
0 10 20 30 40 Public Sector Size (tax revenue, % of GDP)
Theoretical Models of the Relationships between Public Sector Size and Income Inequality: A Curvilinear Model and An Interaction Model
Transition to Democracy
Autocracy or Limited Democracy
Institutionalized Democracy
Inco
me
Ineq
uali
ty (
Gin
i)
Public Sector Size (Government Tax Revenue: % of GDP)
Positive Effects of Public Sector Size on Income Inequality in Autocracy or Limited Democracy, 125 Observations on 36 Countries
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4050
60In
com
e In
equa
lity
(Gin
i)
0 10 20 30 40Public Sector Size (tax revenue, % of GDP)
bandwidth = .8
Lowess smoother
Negative Effects of Public Sector Size in Fully Institutionalized Democracy, 216 Observations on 32 Countries
477
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e In
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lity
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0 10 20 30 40Public Sector Size (tax revenue, % of GDP)
bandwidth = .8
Lowess smoother
Overall Research Agenda II Civic Association Networks and
Institutional Performances
“Labor Unions and Good Governance” (ASR 2007)
“Unions’ Brokerage and Gender Equality” (R&R in AJS)
Unions in Network (Book Manuscript)
Union
Church
Sports Welfare
Culture
Church
Profe-ssional
Culture
Union Sports
Culture
Church
Union Sports
Welfare
2.1.Swedens
2.2. United States
2.4. Argentina 2.5. Russia
Culture
Church
Union
Health
Youth
Culture
Welfare
Union Health
Local
2.3. South Korea
Nordic Countries: Denmark
union
0.59
women
party
0.05 0.73
Liberal Countries:The United States
union
0.28
women
party
0.24 0.18
Conservative Countries: Japan
union
0.15
women
party
0.17 0.08
Overall Research Agenda III
Sectoral Conflicts and Distributional Outcomes in Post-Industrial Democracies (Forthcoming in ASR)
Sectoral Conflicts and Collapse in Wage Bargaining Institutions (Work in Progress)
Over-time Inequality Trajectories: Nordic Countries
20
25
30
35
gin
i re
po
rte
d
1970 1980 1990 2000 2010year
idn = 5 idn = 6idn = 14 idn = 15
Note: Idn denotes country code: 5 = Denmark, 6 = Finland, 14= Norway; 15 = Sweden
Sectoral Conflicts and Formation of Cross-class Alliances Stage I. Inter-class Conflict and Coordinated Wage Bargaining
Export Sector Employers
Public Sector Employees
Public Sector Employers
Export Sector
Employees
Stage II. Emergence of Sectoral Conflicts
Public Sector Employees
Public Sector Employers
Export Sector
EmployeesExport Sector
Employers
Stage III. Cross-Class Alliances
Public Sector Employees
Public Sector Employers
Export Sector
EmployeesExport Sector
Employers
Sectoral Conflicts and Formation of Cross-class Alliances
(High)Public Sector
Employment
(Increasing) Income Inequality
(Decreasing or Stagnant) Total
Employment
(High) Productivity Gap between Sectors
Collapse of Coordinated
Wage Bargaining
(High) Inter-sectoral Conflicts
(High)Wage Differentials between Private and
Public Sectors
(High)Wage Differentials within
Private Sector
Overall Research Agenda: Other and Future Projects
Developmental States and Research Fraud in Asia(2010 SF)
Institutional Origin of Social Trust (R&R in SF) (Today)
The Development and Retrenchment of Welfare States in Less Developed Countries (Next 3-5 Years)
Formal and Informal Control of Scientific Misconduct
Degree of Formal Control
High Low
Degree of Informal Control
High
Low
Anglo-American Model Universities in Regulatory State Illiberal research regime; liberal lab culture; formal and informal control inhibit fraud
Anglo-American Model Universities in Developmental State Liberal research regime; liberal lab culture; informal control inhibits fraud
German Model Universities in Regulatory StateIlliberal research regime; illiberal lab culture; formal control inhibits fraud
German Model Universities in Developmental State Liberal research regime; illiberal lab culture; fraud relatively common
Overview of This TalkInstitutional Origin of Social Trust
To explore the role of social policy design and skill formation in accounting for social trust
To bring sociological perspectives (social exchange theory and institutional theory) into comparative political economy
To re-situate the conventional knowledge of welfare state-trust linkage
To conduct empirical Data Analyses using four waves of World Values Surveys for 17 rich democracies
What is trust & Why Does it Matter? Trust:
“Placing resources at the disposal of another party” (Coleman)
Trust Matters because: √ Basic Source of Social Order √ Source of Efficiency in Transactions
√ Positive Social and Political Outcomes
Dimensions and Sources of Trust
Interest and Transaction-
based
Non-economic Social Relation-based
Cultural Norm-based
Associational/Community-based
Cultural/ Psychological
Social Exchange √ Structure of exchange√ Sanctioning and monitoring mechanisms√ Information of social identities (trustworthiness)
Institutional
Cross-national and Over-time Variations in Trust
a. Residual (Liberal) Countries25
3040
4550
trus
tpop
1980 1985 1990 1995 2000year
Australia CanadaUK US
Cross-national and Over-time Variations in Trust
b. Universal (Social Democratic) Countries40
4550
5560
65tr
ustp
op
1980 1985 1990 1995 2000year
Denmark FinlandNetherlands NorwaySweden
Cross-national and Over-time Variations in Trust
c. Social Insurance (Conservative) Countries
2025
3035
40trus
tpop
1980 1985 1990 1995 2000year
Austria BelgiumFrance GermanyItaly Japan
Micro-Macro Combinational Model of
Trust
Employers
Employees
Welfare State Institutions
Local, Cultural or Structural
Factors
Employers’ Trust of General Others
Employees’ TrustOf General Others
Social Exchange and Social Dilemma(Cook and Colleagues)
A B C D
A B
D C
Group Generalized Exchange
Network-generalized Exchange
ALMP/PSST
A
B
D
C
T = 1
ALMP/PSST
C
A
D
B
T = 2
A
ALMP/PSST
B
C
D
T = 3
Social Exchange Process among Four Labor Market Actors around ALMP (Active Labor Market Policies) in Universal Countries
A: Skilled
B: Unskilled
C: Unemployed
D: Employers
Social Exchange Process under Firm-centered Training in Social Insurance Countries
A
D2D1
B
C
Social Insurance/Assistance
• Firm level Training
• Higher Wage & Benefit
• Strong Employment Protection
• Generous Earning-related Insurance
• Little Training
• Lower Wage
• Weak Employment Protection
• Inferior Earning-related Insurance
Insiders
Outsiders
Skill-based Division
A: Skilled
B: Unskilled
C: Unemployed
D: Employers
Supplement: Social Exchange Process
along Racial Division in Residual Countries
A
D2D1
B
C
Social Insurance/Assistance
• Strong Educational Credentials (General
Skills)
• Individual Bargaining
• Strong Community Resources
• Weak Educational Credentials
• Low Wage
• Low Social Protection
• Weak Community Resources
Majority
Minority
Labor Market Division + Residential Segregation
Immigration
A: Skilled
B: Unskilled
C: Unemployed
D: Employers
Social Exchange Structures & Welfare State Functions (T>1)
Free-riding Monitoring
Group-generalized Exchange
Possible No
Transfer-based Welfare State
High Means-test, butNo Monitoring below threshold
Network-generalized Exchange
Impossible Yes
Training-based Welfare State
Low Institutional
Degree and Scope of Encapsulation of Mutual
Interests
Types of Welfare Regimes
Degree Scope
Universal Countries
High Wide
Social Insurance Countries
Selectively High Divided
Residual Countries Low Fragmented
Supplement: Decision-Making Process
Skilled Workers and Employers’ Decision in Three Welfare Regimes
A’s (or D’s) Decisions
Labor Solidarity of Entire Working Class Strong?
No
NoYes
Yes
Stay with ALMP
Defect ALMPIs A strongly organized?
Firm-level Skill Training with D (or A)
Skill Depreciation for A
Skill and Labor Control for D
Outsourcing/FDI/Immigrants
cf. Decision Choice for B and C?
Universal Countries
Social Insurance Countries
Residual Countries
Causal Flows
Mode of Labor Solidarity
Encom-passing
Divided:P(A)>P(B&C)
Frag-mented
Skill-Supply Welfare Regime
Insurance-Supply Welfare Regime
Minimalist Welfare Regime
High Trust
Low Trust
Low Trust (?)
Power Constellation Institutional Design
Interest and Trust
Building Hypotheses:Social Policies as a Source of Trust
--Universal Countries --
ALMP-based skill provision provides both monitoring mechanisms and incentives to participate in skill exchange process for all actors
Employees: High confidence in maintaining stable living conditions
Employers: High confidence in upgrading skill levels with relative flexibility
Hypothesis 1: Public provision of skill investment will lead to a higher level of social trust.
Building Hypotheses:Social Policies as a Source of Distrust
-- Social Insurance Countries --
Strong Distinction between Insiders and Outsiders
Social insurance programs (originating from firm-level training) perpetuate skill-based status hierarchy Employees: No need to find commonalities Employers: Little Flexibility, High Tax and Co-pay Burden
Hypothesis 2: Higher reliance on corporatist models of insurance programs will lead to lower level of social trust.
Building Hypotheses:Testing the Effects of
Institutional Configuration on Trust
Passive Social Transfers combined with Active Job Training Programs All contributors perceive passive transfers as a part of employment/skill insurance, rather than philanthropic donations to the poor
Hypothesis 3: The effects of passive social transfers on trust will be conditional upon active labor market policies.
Data and Measures:Dependent Variable
Generalized Trust
“Would you say that most people can be trusted or that you can’t be too careful in dealing with people?” (World Values Surveys)
Measurement Issues
√ Particularized Trust
√ Trustworthiness
Generalized Trust
Trust of Neighbors
Trust of Employers
Trust of Colleagues
Data and Measures:Independent Variables
– Welfare State Efforts
Social Policy Spending Structure
-- Measure of Skill-Supply Welfare State Efforts: ALMP Spending
-- Measure of Passive Social Transfers:
Sickness, Family Allowances, and Other Social Assistance and Welfare
-- Measure of Institutional Design: Interaction Between ALMP and Passive Social Transfers
Data and Measures:Independent Variables
-- Control Variables
Individual level: Income, Gender, Age, Religion, Labor Market Status Occupational (Class) Categories: Managers, Professionals, White Collar, Skilled Manual, Unskilled Manual, Agricultural, and Others
Country level: Income Inequality, Ethnic Fragmentation (International Migration), GDP per capita, Unemployment Rate, Net Union Density
Methods: Multi-Level Logit Model
Log(Pji/(1-Pji)) = β0j + β1j (Occupational Categories)ij + β2j (Other Individual Characteristics)ij + γij
β0j = γ00 + γ01(ALMP)j + γ02(Other Country-level Controls)j + u0j
β1j = γ10 + γ11(ALMP)j + γ12(Other Country-level Controls)j + u1j
β2j = γ20
Descriptive Results
Trust
ALMP(% of GDP)
Passive Transfers
(% of GDP)
Old Age/Survivor Pension
(% of GDP) Gini
Universal 55.61 1.27 10.43 8.60 26.85
Social Insurance 30.35 0.70 5.32 10.48 29.15
Residual 41.15 0.40 5.21 5.84 32.40
[Skill Supply Regime Trust] CausalityRelationship between ALMP and Trust
Correlation Coefficient = 0.45, but 0.61 without Belgium and France
AUL
FRA
USAUSAJPN
USA
SWZ
ITA
JPN
AUS
JPNJPN
UKMITA
DEN
CANSWZ
AUS
CAN
ITA
UKMNET
UKM
NOR
FRG
AUL
FRA
NOR
IRE
DEN
FRG
NET
BEL
FIN
FRG
FRG
BELBEL
NOR
IRE
FRA
NET
IRE
FIN
SWE
SWEDEN
SWE
20
30
40
50
60
70
TR
US
T
0 .5 1 1.5 2 2.5
ALMPbandwidth = .8
Lowess smoother
Outliers: Severe Ethnic Fragmentation
Regression Results from Multi-level Logit Model * significant at 10%; ** significant at 5%; *** significant at 1% Total Obs = 49,051;
Results for Controls and Constants are not Shown
Model (1) Model (2) Model (3)
Income Inequality (Gini) -0.023 -0.038 -0.035
(5.22)*** (8.50)*** (7.31)***
Net Migration Rate -0.037 -0.240 -0.169
(0.60) (3.86)*** (2.65)**
ALMP 0.470 -0.023
(8.36)*** (0/13)
Passive Social Transfers -0.037 -0.067
(6.67)*** (6.95)***
ALMP*Passive Social Transfers
0.025
(3.19)***
Regression Results from Multi-level Logit Model * significant at 10%; ** significant at 5%; *** significant at 1% Total Obs = 49,051;
Results for Controls and Constants are not Shown
Cross-level Interaction Terms Model (1)
ALMP*Professionals 0.279***
(3.52)
ALMP*White Collar 0.197**
(3.12)
ALMP*Skilled 0.164*
(2.36)
ALMP*Unskilled 0.228***
(3.33)
ALMP*Agriculture 0.279*
(2.50)
Predicted Probabilities of Trust by Labor Market Status/Large Industry/Occupational Categories
.4.5
.6.7
.8.9
Pre
dict
ed P
roba
bilit
ies
0 1 2 3Active Labor Market Policy
employers professionalswhite_collar skilled_manualunskilled_manual agricultural
Empirical Findings
State-centered investment in workers’ skill provision leads to higher accumulation of social trust.
Contrary to popular belief, the study shows that higher government spending on pension-related benefits and social assistance-related benefits (passive social transfers) are negatively associated with social trust.
Passive social transfers have positive effects on social trust when they are jointly configured with higher spending on active labor market policies.
Theoretical Implications
Linked interest-based account of trust with welfare state typology and designs
Linked Employment relationships with Trust Social Exchange Processes among Class
Actors around skill formation Importance of Institutional Design:
A social policy design combining skill training and income transfers shapes a new constellation of interests and trust among labor market actors
Theoretical Implications
Bringing Sociology Back into Comparative Political Economy:Reformulated VC (the Varieties of Capitalism) School’s skill formation argument in the context of power resource and institutional theories.
It is the Configuration, not the Generosity of Welfare States that accounts for variations in social trust.
한국사회에서의 함의• 사회투자국가론
• 적극적 노동시장 정책과 전통적 사회지출 : -- “ 보완적 관계”
• 적극적 노동시장 정책과 보편적 복지
• 적극적 노동시장 정책과 비정규노동
Supplement: Employers’, Skilled Workers’, and Unskilled Workers’ Trust
by Welfare State Typology20
4060
8020
4060
80
1980 1985 1990 1995 2000
1980 1985 1990 1995 2000
Universal Countries Social Insurance Countries
Residual Countries
Employer SkilledUnskilled
year
Q. Endogeneity: Countries with more trustors might develop ALMP more
actively.
ALMP was created by social democratic policy makers in 50s and 60s. At that point, trust levels in Nordic countries were no more than modest (based on the trajectories shown before).
Netherlands and Germany have increased ALMP (and subsequently boosted trust levels) recently and trust levels were very low in early 80s.
Q. Is trust the same as social capital?
If social capital is equivalent to ”social ties/networks,” or “connections among individuals,” trust (& trustworthiness) could be desirable norms of reciprocity or expected behaviors arising from those ties.
Q. Trust vs. Trustworthiness?
Trustworthiness of trustee (p): the probability that a trustee will behave as a trustor originally expected.
Decision of trust relies on comparing expected gain (G*p) with expected loss (L*(1-p)).
P is dependent upon trustee’s consideration of reputation.
For generalized trust, general others’ trustworthiness will be highly correlated with an individual’s trust of general others, because “general trustworthiness” provide an individual with positive information for trusting decision.Generalized Trust Generalized Trustworthiness≈
Q. Trust of Institutions? Trust of general others and trust of
institutions are highly correlated (Design and Quality of Institutions Both Generalized Trust and Trust of Institutions).
Trust of institutions are closely connected to the probability of trustworthiness (p), but it is very difficult for actors to gauge expected gain (G*p) and expected loss (L*(1-p)) from trusting institutions at current time point.