Flexible labor markets require geographically mobile workers to be efficient. Otherwise firms can take advantage of the immobility of workers and extract rents at the expense of workers. In cultures with strong family ties, moving away from home is costly. Thus, to limit the rents of firms and avoid moving, individuals with strong family ties rationally choose regulated labor markets, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. We find a positive association between labor market rigidities at the beginning of the twenty-first 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.
Alesina, Alberto, and Paola Giuliano. 2014. “Family Ties.” Handbook of Economic Growth, edited by Philippe Aghion and Steven N Durlauf, 2A: 177-215. The Netherlands: North Holland, 2A, 177-215.Abstract
We study the role of the most primitive institution in society: the family. Its organization and relationship between generations shape values formation, economic outcomes and influences national institutions. We use the World Values Survey to measure the strength of family ties and economic attitudes, controlling for country fixed effects. We study several economic attitudes, toward working women, society, generalized morality and civic engagement. Individuals with strong family ties have more traditional beliefs about the role of women in society, are more reluctant to accept changes in society and innovation and show a lower level of trust. We also uncover interesting correlations at the country level, where the strength of family ties is associated with lower GDP and lower quality of institutions. These results remain valid if one exploits the correlation between inherited family values and current institutions and level of development, indicating a strong persistence in family values. The quality of family relationships, on the positive side, increases happiness, life satisfaction, and self-reported health.
We study which policy tool and at what level a majority chooses in order to reduce negative externalities, such as pollution. We consider three instruments: a rule that sets an upper limit to the activity which produces the negative externality, a quota that forces a proportional reduction of the activity, and a proportional tax on it. For all instruments the majority chooses levels which are too restrictive when the activity is performed mainly by a small fraction of the population, and when costs for reducing activities or paying taxes are quite convex. Also, a majority may choose an instrument that is different than what a social planner would choose; for instance, a rule when the social planner would choose a tax.
We propose a test of bias based upon patterns of judicial errors. We model the trial court as minimizing a weighted sum of type I and II errors. We define racial bias as a situation where the weight depends on defendant/victim race. If the court is unbiased, the error rate should be independent of the combination defendant/victim race. We test this prediction using an original dataset on all capital appeals in 1973-1995. We find that in the first and last stages of appeal the probability of error is 3 and 9 percentage points higher for minority defendants who killed white (versus minority) victims.
This paper responds to the comment of Di Tella and Dubra (2013). We first clarify that the model of Alesina and Angeletos (2005) admits two distinct types of multiplicity: one that is at the core of their contribution, and a separate one that is at work in Di Tella and Dubra's example. We then proceed to show how Alesina and Angeletos's results are robust to alternative specifications of the voting mechanism.
By using a unique and large data set on loan contracts between banks and microfirms, we find robust evidence that women in Italy pay more for credit than men, although we do not find any evidence that women borrowers are riskier than men. The male/female differential remains even after controlling for a large number of characteristics of the type of business, the borrower, and the structure of the credit market. The result is not driven by lack of credit history, nor by women using a different type of bank than men, since the same bank charges different rates to male and female borrowers.
The study examines the historical origins of existing cross-cultural differences in beliefs and values regarding the appropriate role of women in society. We test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution of gender norms. We find that, consistent with existing hypotheses, the descendants of societies that traditionally practiced plough agriculture today have less equal gender norms, measured using reported gender-role attitudes and female participation in the workplace, politics and entrepreneurial activities. Our results hold looking across countries, across districts within countries, and across ethnicities within districts. To test for the importance of cultural persistence, we examine the children of immigrants living in Europe and the United States. We find that even among these individuals, all born and raised in the same country, those with a heritage of traditional plough use exhibit less equal beliefs about gender roles today.
Ideas about what is ‘fair’ influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We show how including beliefs about fairness can keep two otherwise identical countries on different development paths for a very long time. We show how different initial conditions
regarding how ‘fair’ is the same level of inequality can lead to two permanently different steady states. We also explore how bequest taxation can be an efficient way of redistributing wealth to correct ‘unfair’ past accumulation of inequality.
The Great Recession has severely hit the economies of most of the countries. Given that, fiscal policies have gained back a central role in the debate as a tool to recover from this situation. This paper provides an overview about the main controversial issues related to the fiscal policy. In particular, we analyze the role and the different effects played by discretionary counter-cyclical policies – say, for instance, tax cuts or increased government spending. Disagreement on this topic follows from the fact that it is extremely difficult to isolate the exogenous effect of these policies on GDP. We review several ways in which economists have tried to deal with this problem of estimation. Finally, we discuss why spending-based adjustments are preferable and less likely to be costly than tax-based ones and why large fiscal consolidation accompanied by appropriate policies can be much less costly than what we think.
Arti cial states are those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for all countries in the world two new measures how arti cial states are. One is based on measuring how borders split ethnic groups into two separate adjacent countries. The other one measures how straight land borders are, under the assumption the straight land borders are more likely to be arti cial. We then show that these two measures seem to be highly correlated with several measures of political and economic success.
We establish an inverse relationship between family ties, generalized trust and political participation. The more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is civic engagement and political participation. The latter, together with trust, are part of what is known as social capital, therefore in this paper we contribute to the investigation of the origin and evolution of social capital over time. We establish these results using within country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.