Worker Identity, Employment Fluctuations and Stabilization Policy

Dennis Snower and Wolfgang Lechthaler

No 9478, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper provides a model of "social hysteresis," whereby long, deep recessions demotivate workers and thereby lead them to change their work ethic. In switching from a pro-work to an anti-work identity, their incentives to seek and retain work fall and consequently their employment chances fall. In this way, temporary recessions may come to have permanent effects on aggregate employment. We also show that these permanent effects, along with the underlying identity switches, can be avoided through stabilization policy. The size of the government expenditure multiplier can be shown to depend on the composition of identities in the workforce.

Keywords: Economics of identity; Work ethic; Hysteresis; Business cycle policy (search for similar items in EconPapers)
JEL-codes: E24 E60 J21 J28 (search for similar items in EconPapers)
Date: 2013-05
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP9478 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Worker Identity, Employment Fluctuations and Stabilization Policy (2013)
Working Paper: Worker Identity, Employment Fluctuations and Stabilization Policy (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9478

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9478

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().