Endogenous social norms - implications for optimal welfare state programs
Author
Summary, in English
This paper investigates the implications of an endogenous social work norm for the optimal welfare state program. Assuming that individual productivity is observable, the analysis finds that restrictions on program participation, implying a larger benefit to a smaller group of recipients, may be welfare improving. However, the effect of the norm is indeterminate. The disutility of non-compliance suggests a higher benefit; the endogeneity of the norm suggests a lower benefit. Assuming that individual productivity is not observable, the analysis finds that the social norm unambiguously contributes to increased program generosity. However, for sufficiently generous policies, the norm contributes to program retrenchment.
Department/s
Publishing year
2009
Language
English
Publication/Series
Working Paper
Issue
17
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Document type
Working paper
Publisher
Department of Economics, Lund University
Topic
- Economics
Keywords
- Welfare analysis
- Social norm
- Welfare state
Status
Published