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Work norms, social insurance and the allocation of talent

  • Corneo, Giacomo

This paper challenges the view that weak work norms make generous welfare states 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 way for parents to protect their children from the risk of lacking talent. 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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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 107 (2013)
Issue (Month): C ()
Pages: 79-92

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Handle: RePEc:eee:pubeco:v:107:y:2013:i:c:p:79-92
DOI: 10.1016/j.jpubeco.2013.09.002
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  19. Corneo, Giacomo, 2013. "Work Norms, Social Insurance and the Allocation of Talent," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 405, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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