IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00395668.html
   My bibliography  Save this paper

Civic Virtue and Labor Markets Institutions

Author

Listed:
  • Pierre Cahuc

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

  • Yann Algan

    () (Paris East U.)

Abstract

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.

Suggested Citation

  • Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Markets Institutions," Post-Print hal-00395668, HAL.
  • Handle: RePEc:hal:journl:hal-00395668
    DOI: 10.1257/mac.1.1.111
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00395668
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrea Ichino & Giovanni Maggi, 2000. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 1057-1090.
    2. 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.
    3. Decreuse, Bruno & van Ypersele, Tanguy, 2011. "Housing market regulation and the social demand for job protection," Journal of Public Economics, Elsevier, vol. 95(11), pages 1397-1409.
    4. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Journal of Public Economics, Elsevier, vol. 107(C), pages 79-92.
    5. Burdett, Kenneth & Wright, Randall, 1989. "Optimal firm size, taxes, and unemployment," Journal of Public Economics, Elsevier, vol. 39(3), pages 275-287, August.
    6. 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 1479-1496, December.
    7. Daniel Arnold, 2013. "Benefit Morale and Cross-Country Diversity in Sick Pay Entitlements," Kyklos, Wiley Blackwell, vol. 66(1), pages 27-45, February.
    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, September.
    9. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 677-716, June.
    10. Assar Lindbeck & Sten Nyberg, 2006. "Raising Children to Work Hard: Altruism, Work Norms, and Social Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1473-1503.
    11. Philippe Aghion & Yann Algan & Pierre Cahuc, 2008. "Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations," Working Papers hal-00972820, HAL.
    12. 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.
    13. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-177, January.
    14. Yann Algan & Pierre Cahuc, 2005. "The Roots of Low European Employment: Family Culture?," NBER Chapters,in: NBER International Seminar on Macroeconomics 2005, pages 65-109 National Bureau of Economic Research, Inc.
    15. Tito Boeri & J. Ignacio Conde-Ruiz & Vincenzo Galasso, "undated". "Cross-skill Redistribution and the Tradeoff between Unemployment Benefits and Employment Protection," Working Papers 2004-26, FEDEA.
    16. Paolo Pinotti, 2012. "Trust, Regulation and Market Failures," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 650-658, August.
    17. 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.
    18. 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.
    19. Gaston, Noel & Rajaguru, Gulasekaran, 2013. "International migration and the welfare state revisited," European Journal of Political Economy, Elsevier, vol. 29(C), pages 90-101.
    20. 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, September.
    21. Eiji Yamamura, 2012. "Government Size and Trust," Review of Social Economy, Taylor & Francis Journals, vol. 70(1), pages 31-56, December.
    22. Claus-Jochen Haake & Tim Krieger & Steffen Minter, 2013. "On the institutional design of burden sharing when financing external border enforcement in the EU," International Economics and Economic Policy, Springer, vol. 10(4), pages 583-612, December.
    23. Tommaso Nannicini & Andrea Stella & Guido Tabellini & Ugo Troiano, 2013. "Social Capital and Political Accountability," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 222-250, May.
    24. Eiji Yamamura, 2014. "Trust in government and its effect on preferences for income redistribution and perceived tax burden," Economics of Governance, Springer, vol. 15(1), pages 71-100, February.
    25. Potrafke, Niklas, 2013. "Globalization and labor market institutions: International empirical evidence," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 829-842.
    26. Olivier Blanchard & Florence Jaumotte & Prakash Loungani, 2014. "Labor market policies and IMF advice in advanced economies during the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    27. L. Rachel Ngai & Christopher A. Pissarides, 2011. "Taxes, Social Subsidies, and the Allocation of Work Time," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(4), pages 1-26, October.
    28. 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.
    29. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    30. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-957, October.
    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, February.
    32. repec:spo:wpecon:info:hdl:2441/8810 is not listed on IDEAS
    33. Giacomo Corneo & Frank Neher, 2014. "Income inequality and self-reported values," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(1), pages 49-71, March.
    34. 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 413-448, November.
    35. 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.
    36. Schumacher, Ingmar, 2013. "Political stability, corruption and trust in politicians," Economic Modelling, Elsevier, vol. 31(C), pages 359-369.
    37. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.
    38. repec:spo:wpecon:info:hdl:2441/8808 is not listed on IDEAS
    39. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
    40. Yann Algan & Pierre Cahuc, 2013. "Trust and Growth," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 521-549, May.
    41. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
    42. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00395668. 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: (CCSD). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.