Working Paper: CEPR ID: DP9028
Authors: Giacomo Corneo
Abstract: Across countries, generous social insurance comes along with weak work norms. This finding is often taken to mean that in the long run social insurance generates large output losses. But neither individual nor country data corroborates the view that weak work norms worsen economic performance. This paper offers a model of endogenous work norms that rationalizes that evidence. Weak work norms do not harm labor productivity because they are associated with an improved allocation of individual talents to occupations, while strong work norms arise as a defensive strategy of parents aiming at perpetueting their occupation along family lines. Evidence from microdata supports the view that (i) social insurance favors intergenerational occupational mobility and (ii) more mobile individuals endorse weaker work norms.
Keywords: social insurance; work norms
JEL Codes: H2; O0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Generosity of social insurance (H55) | Weaker work norms (J89) |
| Weaker work norms (J89) | Labor productivity (O49) |
| Parental strategies (J12) | Strong work norms (J81) |
| Occupational inheritance (J29) | Stronger work norms (J29) |
| Unemployed backgrounds (J64) | Weaker work norms (J89) |
| Strength of work norms (J81) | Efficiency of talent allocation (D29) |
| Social insurance (H55) | Intergenerational occupational mobility (J62) |
| Intergenerational occupational mobility (J62) | Innovation and growth (O00) |