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Work Norms, Social Insurance and the Allocation of Talent

  • Corneo, Giacomo

This paper challanges the view that weak work norms in generous welfare states makes them 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 defensive strategy of parents that aims at perpetuating their occupation along family lines. 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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Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 405.

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Date of creation: Aug 2013
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Handle: RePEc:trf:wpaper:405
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  9. Lindbeck, Assar, 1997. "Incentives and Social Norms in Household Behavior," Seminar Papers 622, Stockholm University, Institute for International Economic Studies.
  10. Corneo, Giacomo & Jeanne, Olivier, 2007. "A theory of tolerance," Discussion Papers 2007/13, Free University Berlin, School of Business & Economics.
  11. Bingley, Paul & Corak, Miles & Westergård-Nielsen, Niels C., 2011. "The Intergenerational Transmission of Employers in Canada and Denmark," IZA Discussion Papers 5593, Institute for the Study of Labor (IZA).
  12. Lindbeck, Assar & Nyberg, Sten, 2001. "Raising Children to Work Hard: Altruism, Work Norms and Social Insurance," Working Paper Series 557, Research Institute of Industrial Economics.
  13. Matthias Doepke & Fabrizio Zilibotti, 2007. "Occupational Choice and the Spirit of Capitalism," SFB 649 Discussion Papers SFB649DP2007-049, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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  19. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 503-30, May.
  20. Corneo, Giacomo & Jeanne, Olivier, 2007. "Symbolic Values, Occupational Choice, and Economic Development," IZA Discussion Papers 2763, Institute for the Study of Labor (IZA).
  21. Giacomo Corneo, 2012. "Work Norms and the Welfare State," CESifo Economic Studies, CESifo, vol. 58(4), pages 599-625, December.
  22. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Discussion Papers 2013/12, Free University Berlin, School of Business & Economics.
  23. Corak, Miles & Piraino, Patrizio, 2010. "The Intergenerational Transmission of Employers," IZA Discussion Papers 4819, Institute for the Study of Labor (IZA).
  24. Mark Gradstein, 2009. "Work Attitudes and Intergenerational Mobility," Journal of Human Capital, University of Chicago Press, vol. 3(3), pages 268-288.
  25. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
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  27. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers 02-26, Duke University, Department of Economics.
  28. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
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  30. Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March.
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