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The destabilizing effects of the social norm to work under a social security system

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  • Dos Santos Ferreira, Rodolphe
  • Lloyd-Braga, Teresa
  • Modesto, Leonor

Abstract

We study employment dynamics in an OLG model with unemployment benefits financed by taxing wages, and with a defined contribution plan. The novelty with respect to recent studies of the effects of social security in this context is that we introduce a social norm to work, shaping the worker’s participation decision, and hence affecting the reservation wage. We find that a strong social norm to work destabilizes conventional wisdom by reversing the negative effects of social security on employment, and destabilizes the economy by facilitating the emergence of endogenous fluctuations.

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  • Dos Santos Ferreira, Rodolphe & Lloyd-Braga, Teresa & Modesto, Leonor, 2015. "The destabilizing effects of the social norm to work under a social security system," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 64-72.
    • Handle: RePEc:eee:matsoc:v:76:y:2015:i:c:p:64-72
    DOI: 10.1016/j.mathsocsci.2015.04.004
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    Cited by:

    1. Jean-Michel Grandmont, 2016. "Endogenous Procyclicality of Labor Productivity, Employment, Real Wages and Effort in Conditionally Heteroskedastic Sunspots Unemployment Business Cycles with Negishi-Solow Efficiency Wages," Working Papers 2016:10, Department of Economics, University of Venice "Ca' Foscari".
    2. Jean-Michel Grandmont, "undated". "Countercyclical Endogenous Uncertainty Shocks, Efficiency Wages and Procyclical Precautionary Labor Productivity," Working Papers 2017:25, Department of Economics, University of Venice "Ca' Foscari".
    3. Marta Aloi & Teresa Lloyd-Braga & Manuel Leite-Monteiro, 2017. "Welfare benefit reforms and employment," Discussion Papers 2017/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    4. Jean-Michel Grandmont, 2016. "Endogenous Procyclicality of Labor Productivity, Employment, Real Wages and Effort in Conditionally Heteroskedastic Sunspots Unemployment Business Cycles with Negishi-Solow Efficiency Wages," Working Papers 2016-06, Center for Research in Economics and Statistics.
    5. Dominik Buttler, 2022. "Employment Status and Well-Being Among Young Individuals. Why Do We Observe Cross-Country Differences?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 409-437, November.

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