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Family Values and the Regulation of Labor

Listed author(s):
  • Alberto Alesina

    (Department of Economics)

  • Yann Algan

    (Département d'économie)

  • Pierre Cahuc

    (Department of Economics)

  • Paola Giuliano

    (Anderson School of Management - Global Economics and Management)

To be efficient, flexible labor markets require geographically mobile workers. Otherwise firms can take advantage of workers' immobility and extract rents at their expense. In cultures with strong family ties, moving away from home is costly. Thus, to limit the rents of firms and to avoid moving, individuals with strong family ties rationally choose regulated labor markets, even though regulation generates higher unemployment and lower incomes. Empirically, we find that individuals who inherit stronger family ties are less mobile, have lower wages and higher unemployment, and support more stringent labor market regulations. We find a positive association between labor market rigidities at the beginning of the 21st century and family values prevailing before World War II, and between family structures in the Middle Ages and current desire for labor market regulation. Both results suggest that labor market regulations have deep cultural roots.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/20g3idj0jd9iqosvjjdcbu44lu.

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Date of creation: Apr 2015
Publication status: Published in Journal of the European Economic Association, 2015, vol. Forthcoming in print
Handle: RePEc:spo:wpmain:info:hdl:2441/20g3idj0jd9iqosvjjdcbu44lu
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