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Jean-Baptiste Michau, Unemployment Insurance and Cultural Transmission: Theory and Application To European Unemployment, Journal of the European Economic Association, Volume 11, Issue 6, 1 December 2013, Pages 1320–1347, https://doi.org/10.1111/jeea.12065
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Abstract
This paper emphasizes the two-way causality between the provision of unemployment insurance and the cultural transmission of civicness. The returns to being uncivic are increasing in the generosity of unemployment insurance; but this generosity is decreasing in the number of uncivic individuals. In this context, I determine the evolution of preferences across generations and show that cultural heterogeneity is sustained over the long-run. The dynamics of cultural transmission can generate a long lag between the introduction of unemployment insurance and an increase in people’s willingness to live off government-provided benefits. Hence, it offers an explanation to the ‘European unemployment puzzle’ due to the coexistence of generous unemployment insurance and low unemployment in the 1950s and 1960s.