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Work Norms, Social Insurance and the Allocation of Talent

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  • Corneo, Giacomo
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    Abstract

    This paper challanges the view that weak work norms in generous welfare states makes them economically unsustainable. I develop a dynamic model of family-transmitted values that has a laissez-faire equilibrium with strong work norms coexisting with a social-insurance equilibrium with weak work norms. While the former has better incentives, the latter induces more intergenerational occupational mobility which improves the allocation of talent and fuels growth. Strong work norms arise as a defensive strategy of parents that aims at perpetuating their occupation along family lines. I present evidence from microdata showing that generous social insurance correlates with high intergenerational occupational mobility and that more mobile individuals endorse weaker work norms.

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    Bibliographic Info

    Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 405.

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    Date of creation: Aug 2013
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    Handle: RePEc:trf:wpaper:405

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    Keywords: work norms; unemployment insurance; occupational mobility; economic growth;

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    References

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    1. Jean-Baptiste Michau, 2013. "Unemployment Insurance And Cultural Transmission: Theory And Application To European Unemployment," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1320-1347, December.
    2. Assar Lindbeck & Sten Nyberg & Jšrgen W. Weibull, 1999. "Social Norms And Economic Incentives In The Welfare State," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 1-35, February.
    3. Giacomo Corneo & Olivier Jeanne, 2007. "A Theory of Tolerance," CESifo Working Paper Series 1941, CESifo Group Munich.
    4. Laurence Kranich & Matteo Cervellati & Joan Esteban, 2010. "Work Values, Endogenous Sentiments and Redistribution," Discussion Papers 10-05, University at Albany, SUNY, Department of Economics.
    5. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
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    7. Giacomo Corneo, 2012. "Work Norms and the Welfare State," CESifo Economic Studies, CESifo, vol. 58(4), pages 599-625, December.
    8. Humlum, Maria Knoth & Kleinjans, Kristin J. & Nielsen, Helena Skyt, 2007. "An Economic Analysis of Identity and Career Choice," IZA Discussion Papers 3120, Institute for the Study of Labor (IZA).
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    10. Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March.
    11. Mark Gradstein, 2009. "Work Attitudes and Intergenerational Mobility," Journal of Human Capital, University of Chicago Press, vol. 3(3), pages 268-288.
    12. Bénabou, Roland & Tirole, Jean, 2005. "Belief in a Just World and Redistributive Politics," CEPR Discussion Papers 4952, C.E.P.R. Discussion Papers.
    13. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 503-30, May.
    14. Lindbeck, A, 1996. "Incentives and Social Norms in Household Behavior," Papers 622, Stockholm - International Economic Studies.
    15. Corak, Miles & Piraino, Patrizio, 2010. "The Intergenerational Transmission of Employers," IZA Discussion Papers 4819, Institute for the Study of Labor (IZA).
    16. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
    17. Cervellati, Matteo & Esteban, Joan & Kranich, Laurence, 2010. "Work values, endogenous sentiments redistribution," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 612-627, October.
    18. Bingley, Paul & Corak, Miles & Westergård-Nielsen, Niels C., 2011. "The Intergenerational Transmission of Employers in Canada and Denmark," IZA Discussion Papers 5593, Institute for the Study of Labor (IZA).
    19. Corneo, Giacomo & Jeanne, Olivier, 2007. "Symbolic Values, Occupational Choice, and Economic Development," IZA Discussion Papers 2763, Institute for the Study of Labor (IZA).
    20. Cervellati, Matteo & Vanin, Paolo, 2013. "“Thou shalt not covet”: Prohibitions, temptation and moral values," Journal of Public Economics, Elsevier, vol. 103(C), pages 15-28.
    21. Bisin, A. & Verdier, T., 1999. "Beyond the Melting Pot : Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits," DELTA Working Papers 1999-10, DELTA (Ecole normale supérieure).
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    Cited by:
    1. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Journal of Public Economics, Elsevier, vol. 107(C), pages 79-92.

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