When in Rome Work as Romans Work

LABOUR MARKETS ARE INFLUENCED BY CULTURAL TRAITS, GIAVAZZI FINDS OUT IN A PAPER WITH SCHIANTARELLI AND SERAFINELLI, WHICH DOESN'T PLAY DOWN THE IMPORTANCE OF POLICIES AND INSTITUTIONS

Labour market outcomes are influenced by a country’s culture, and changes in culture determine changes in labour market outcomes, Francesco Giavazzi (Department of Economics), Fabio Schiantarelli (Boston College) and Michel Serafinelli (University of California, Berkeley) state in Attitudes, Policies and Work (forthcoming in Journal of the European Economic Association), a study that captures variations of culture and labour markets both in space and in time.

The focus of the paper is on the cultural determinants of the employment rate of women and the young and the average number of hours worked, while the purpose of the authors is to overcome the limitations of the extant literature on culture and labour markets, which fails to allow for other factors that may determine labour market outcomes, such as policies and institutions; generally doesn’t recognize that the variables used to capture a country’s culture are typically endogenous; seldom recognizes that employment rates and hours of work evolve only gradually.

Giavazzi and his colleagues measure cultural attitudes towards women’s work (a possible determinant of female employment), youth independence (for its possible relation to employment of the young) and the importance of holidays (possibly related to the hours worked), through the World Value Survey, a research project that regularly explores people’s values through surveys in almost 100 countries. They design a model in which labour market outcomes are a function of cultural indicators, policies and their own lagged values and test it through the Generalized Method of Moments (GMM).

They find that the attitude towards motherhood is an important determinant of female employment (which decreases at the increase of people thinking that motherhood is essential to the fulfilment of a woman) and that the attitude towards holidays influences the number of hours worked (the more holidays are appreciated, the less people work), but that this can’t be an excuse for skipping good policies – which are also important. Namely, a strong employment protection legislation turns out to be a hurdle to female employment, because it favours insiders (mostly prime age males), while a high tax wedge limits the hours worked. “For instance, in 2000 the women employment rate in the UK was 21.4 percentage points higher than in Italy”, the authors write in order to give an idea of the magnitude of the effects, “9.1 percentage points are explained by differences in attitudes (more liberal in the UK) and 14.7 percentage points by differences in employment protection legislation (stricter in Italy)”.

Nothing conclusive can be said, instead, of the relation between culture and youth employment.

by Fabio Todesco