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Family Values and the Regulation of Labor

Author

Listed:
  • Alesina, Alberto

    (Harvard University)

  • Algan, Yann

    (Sciences Po, Paris)

  • Cahuc, Pierre

    (Sciences Po, Paris)

  • Giuliano, Paola

    (University of California, Los Angeles)

Abstract

Flexible labor markets require geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots.

Suggested Citation

  • Alesina, Alberto & Algan, Yann & Cahuc, Pierre & Giuliano, Paola, 2010. "Family Values and the Regulation of Labor," IZA Discussion Papers 4747, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp4747
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    More about this item

    Keywords

    labor regulation; family values;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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