IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Civic Virtue and Labor Market Institutions

  • Pierre Cahuc
  • Yann Algan

We argue civic virtue plays a key role in explaining the design of public insurance against unemployment risks by solving moral hazard issues which hinder the efficiency of unemployment insurance. We show, in a simple model, that economies with stronger civic virtues are more prone to provide insurance through unemployment benefits rather than through job protection. We provide cross-country empirical evidence of a strong correlation between civic attitudes and the design of unemployment benefits and employment protection in OECD countries over the period 1980 to 2003. We then use an epidemiological approach to estimate the existence of a potential causal relationship from inherited civic virtue to labor market insurance institutions. (JEL: J41, J65, J68, Z13)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.1.1.111
Download Restriction: no

File URL: http://www.aeaweb.org/aej-macro/data/2007-0002_data.zip
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 1 (2009)
Issue (Month): 1 (January)
Pages: 111-45

as
in new window

Handle: RePEc:aea:aejmac:v:1:y:2009:i:1:p:111-45
Note: DOI: 10.1257/mac.1.1.111
Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
Email:


More information through EDIRC

Order Information: Web: https://www.aeaweb.org/subscribe.html

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Guido Tabellini, 2006. "Culture and institutions: economic development in the regions of Europe," Levine's Working Paper Archive 321307000000000466, David K. Levine.
  2. Burdett, Kenneth & Wright, Randall, 1989. "Unemployment Insurance and Short-Time Compensation: The Effects on Layoffs, Hours per Worker, and Wages," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1479-96, December.
  3. Schumacher, Ingmar, 2013. "Political stability, corruption and trust in politicians," Economic Modelling, Elsevier, vol. 31(C), pages 359-369.
  4. Andrea Ichino & Giovanni Maggi, 1999. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," NBER Working Papers 7415, National Bureau of Economic Research, Inc.
  5. Kiander, Jaakko, 1993. "Endogenous unemployment insurance in a monopoly union model when job search matters," Journal of Public Economics, Elsevier, vol. 52(1), pages 101-115, August.
  6. Paolo Pinotti, 2012. "Trust, Regulation and Market Failures," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 650-658, August.
  7. Claus-Jochen Haake & Tim Krieger & Steffen Minter, 2010. "On the institutional design of burden sharing when financing external border enforcement in the EU," Working Papers CIE 25, Paderborn University, CIE Center for International Economics.
  8. Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, 09.
  9. Faria, Hugo J. & Morales, Daniel R. & Pineda, Natasha & Montesinos, Hugo M., 2012. "Can capitalism restrain public perceived corruption? Some evidence," Journal of Institutional Economics, Cambridge University Press, vol. 8(04), pages 511-535, December.
  10. Alessandra Fogli & Raquel Fernandez, 2005. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," Working Papers 05-07, New York University, Leonard N. Stern School of Business, Department of Economics.
  11. Philippe Aghion & Yann Algan & Pierre Cahuc, 2008. "Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations," NBER Working Papers 14327, National Bureau of Economic Research, Inc.
  12. Olivier J. Blanchard & Florence Jaumotte & Prakash Loungani, 2013. "Labor Market Policies and IMF Advice in Advanced Economies during the Great Recession," IMF Staff Discussion Notes 13/02, International Monetary Fund.
  13. Yann Algan & Pierre Cahuc, 2005. "The Roots of Low European Employment : Family Culture?," Working Papers hal-01065597, HAL.
  14. Daniel Arnold, 2012. "Benefit Morale and Cross-Country Diversity in Sick Pay Entitlements," IAAEU Discussion Papers 201211, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  15. Nannicini, Tommaso & Stella, Andrea & Tabellini, Guido & Troiano, Ugo, 2010. "Social Capital and Political Accountability," CEPR Discussion Papers 7782, C.E.P.R. Discussion Papers.
  16. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Discussion Papers 2013/12, Free University Berlin, School of Business & Economics.
  17. Lindbeck, Assar & Nyberg, Sten, 2001. "Raising Children to Work Hard: Altruism, Work Norms and Social Insurance," Research Papers in Economics 2001:5, Stockholm University, Department of Economics.
  18. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
  19. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," Sciences Po publications info:hdl:2441/432sbils8u9, Sciences Po.
  20. Potrafke, Niklas, 2013. "Globalization and labor market institutions: International empirical evidence," Munich Reprints in Economics 19288, University of Munich, Department of Economics.
  21. Beatrix Eugster & Rafael Lalive & Andreas Steinhauer & Josef Zweimüller, 2011. "The Demand for Social Insurance: Does Culture Matter?," Economic Journal, Royal Economic Society, vol. 121(556), pages F413-F448, November.
  22. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
  23. Roland Iwan Luttens & Marie-Anne Valfort, 2012. "Voting for Redistribution under Desert-Sensitive Altruism," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 881-907, 09.
  24. Bruno Decreuse & Tanguy Van Ypersele, 2010. "Housing market regulation and the social demand for job protection," Working Papers halshs-00481456, HAL.
  25. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-57, October.
  26. Burdett, Kenneth & Wright, Randall, 1989. "Optimal firm size, taxes, and unemployment," Journal of Public Economics, Elsevier, vol. 39(3), pages 275-287, August.
  27. Corneo, Giacomo & Neher, Frank, 2012. "Income Inequality and Self-Reported Values," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 382, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  28. Boeri, Tito & Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 2004. "Cross-Skill Redistribution and the Trade-Off Between Unemployment Benefits and Employment Protection," CEPR Discussion Papers 4711, C.E.P.R. Discussion Papers.
  29. Yamamura, Eiji, 2012. "Trust in government and its effect on preferences for income redistribution and perceived tax burden," MPRA Paper 39833, University Library of Munich, Germany.
  30. L. Rachel Ngai & Christopher A. Pissarides, 2011. "Taxes, social subsidies, and the allocation of work time," LSE Research Online Documents on Economics 39262, London School of Economics and Political Science, LSE Library.
  31. Andreas Bergh & Christian Bjørnskov, 2011. "Historical Trust Levels Predict the Current Size of the Welfare State," Kyklos, Wiley Blackwell, vol. 64(1), pages 1-19, 02.
  32. Niklas Potrafke, 2010. "Labor market deregulation and globalization: empirical evidence from OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 545-571, September.
  33. Yamamura, Eiji, 2010. "Government size and trust," MPRA Paper 24985, University Library of Munich, Germany.
  34. Yann Algan & Pierre Cahuc, 2013. "Trust and Growth," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 521-549, 05.
  35. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.
  36. repec:spo:wpecon:info:hdl:2441/8808 is not listed on IDEAS
  37. repec:spo:wpecon:info:hdl:2441/8810 is not listed on IDEAS
  38. Raquel Fernández & Alessandra Fogli & Claudia Olivetti, 2004. "Mothers and Sons: Preference Formation and Female Labor Force Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1249-1299.
  39. Christian Bjørnskov & Gert Svendsen, 2013. "Does social trust determine the size of the welfare state? Evidence using historical identification," Public Choice, Springer, vol. 157(1), pages 269-286, October.
  40. Contini, Dalit & Richiardi, Matteo G., 2012. "Reconsidering the effect of welfare stigma on unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 229-244.
  41. W. Henry Chiu & Edi Karni, 1998. "Endogenous Adverse Selection and Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 806-827, August.
Full references (including those not matched with items on IDEAS)

This item is featured on the following reading lists or Wikipedia pages:

  1. Civic Virtue and Labor Market Institutions (AEJ:MA 2009) in ReplicationWiki

When requesting a correction, please mention this item's handle: RePEc:aea:aejmac:v:1:y:2009:i:1:p:111-45. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.