Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 476: Social Norms and Economic Incentives in the Welfare State

Assar Lindbeck (), Sten Nyberg and Jörgen W. Weibull
Additional contact information
Assar Lindbeck: Research Institute of Industrial Economics (IFN)
Sten Nyberg: Research Institute of Industrial Economics (IFN)
Jörgen W. Weibull: Research Institute of Industrial Economics (IFN)

Abstract: This paper analyzes the interplay between social norms and economic incentives in the context of work decisions in the modern welfare state. We assume that to live off one's own work is a social norm, and that the larger the population fraction adhering to this norm, the more intensely it is felt by the individual. Individuals face two choices, one economic, whether to work or live off public transfers, and one political, how large the transfer should be. The model highlights certain factors determining the size of the welfare state.

Keywords: Welfare Economics; Decision Making; Incentives

JEL-codes: D60; D81; O31

27 pages, May 1997

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