Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 585: Social Norms and Welfare State Dynamics

Assar Lindbeck (), Sten Nyberg () and Jörgen W. Weibull ()
Additional contact information
Assar Lindbeck: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Sten Nyberg: Stockholm University, Postal: Department of Economics, SE-106 91 Stockholm, Sweden
Jörgen W. Weibull: Boston University, Postal: Department of Economics, 270 Bay State Road, Boston MA 02215, USA

Abstract: The paper analyses the interaction between economic incentives and work norms in the context of social insurance. If the work norm is endogenous in the sense that it is weaker when the population share of beneficiaries is higher, then voters will choose less generous benefits than otherwise. We also discuss welfare-state dynamics when there is a time lag in the adjustment of the norm in response to changes in this population share, and show how a temporary shift in the unemployment rate may cause persistence in the number of beneficiaries.

Keywords: Welfare State; Social Norms; Social Insurance

JEL-codes: D19; D64; H31; Z13

14 pages, November 15, 2002

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