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Work Norms and the Welfare State

  • Giacomo Corneo

Many European countries still provide their citizens with social insurance programs of unprecedented generosity. A cultural critique of the welfare state contends that generous social insurance has detrimental effects on work norms. This article revisits the model of endogenous work ethic developed by Lindbeck and Nyberg and explores survey evidence on the relationship between social spending and pro-work attitudes. Both theoretical and empirical support of the cultural critique to the welfare state are found to be fragile. Furthermore, the empirical relationship between individual work ethic and individual income is shown to be non-monotonic, suggesting that weaker work norms needs not harm economic performance. (JEL code: H2) Copyright The Author 2012. Published by Oxford University Press on behalf of Ifo Institute, Munich. All rights reserved. For permissions, please email:, Oxford University Press.

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Article provided by CESifo in its journal CESifo Economic Studies.

Volume (Year): 58 (2012)
Issue (Month): 4 (December)
Pages: 599-625

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Handle: RePEc:oup:cesifo:v:58:y:2012:i:4:p:599-625
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  1. Martin Halla & Mario Lackner & Friedrich G. Schneider, 2010. "An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale -super-* ," Kyklos, Wiley Blackwell, vol. 63(1), pages 55-74, 02.
  2. Assar Lindbeck & Sten Nyberg & Jörgen W. Weibull, 2003. "Social Norms and Welfare State Dynamics," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 533-542, 04/05.
  3. Friedrich Heinemann, 2008. "Is the Welfare State Self-Destructive? A Study of Government Benefit Morale," Kyklos, Wiley Blackwell, vol. 61(2), pages 237-257, 05.
  4. 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.
  5. Bjorklund, Anders, 1993. "A Comparison between Actual Distributions of Annual and Lifetime Income: Sweden 1951-89," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 377-86, December.
  6. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," American Economic Review, American Economic Association, vol. 96(4), pages 1308-1320, September.
  7. Corneo Giacomo, 2011. "Stakeholding as a New Development Strategy for Saudi Arabia," Review of Middle East Economics and Finance, De Gruyter, vol. 7(1), pages 1-19, May.
  8. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," Working Paper Series 428, Research Institute of Industrial Economics.
  9. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
  10. Gradstein, Mark, 2010. "Social Insurance, Education, and Work Ethics," CEPR Discussion Papers 7838, C.E.P.R. Discussion Papers.
  11. Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
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