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Family Values and the Regulation of Labor

Author

Listed:
  • Alberto F. Alesina
  • Yann Algan
  • Pierre Cahuc
  • Paola Giuliano
Abstract
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.

Suggested Citation

  • Alberto F. Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, 2010. "Family Values and the Regulation of Labor," NBER Working Papers 15747, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:15747
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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K2 - Law and Economics - - Regulation and Business Law

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