Civic Virtue and Labor Markets Institutions

Pierre Cahuc and Yann Algan

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Abstract: We argue civic virtue plays a key role in explaining the design of public insurance against unemployment risks by solving moral hazard issues which hinder the efficiency of unemployment insurance. We show, in a simple model, that economies with stronger civic virtues are more prone to provide insurance through unemployment benefits rather than through job protection. We provide cross-country empirical evidence of a strong correlation between civic attitudes and the design of unemployment benefits and employment protection in OECD countries over the period 1980 to 2003. We then use an epidemiological approach to estimate the existence of a potential causal relationship from inherited civic virtue to labor market insurance institutions.

Date: 2009
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Published in American Economic Journal: Macroeconomics, 2009, 1 (1), pp.111-145. ⟨10.1257/mac.1.1.111⟩

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Journal Article: Civic Virtue and Labor Market Institutions (2009)
Working Paper: Civic Vitue and Labor Market Institutions (2009)
Working Paper: Civic Virtue and Labor Market Institutions (2009)
Working Paper: Civic Vitue and Labor Market Institutions (2009)
Working Paper: Civic Virtue and Labor Market Institutions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00395668

DOI: 10.1257/mac.1.1.111

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