January 2006

No. 1928: Civic Attitudes and the Design of Labor Market Institutions: Which Countries Can Implement the Danish Flexicurity Model?

published as "Civic Virtue and Labor Market Institutions" in: American Economic Journal: Macroeconomics, 2009, 1(1), 111-145

We argue that the efficiency of the Danish flexicurity Model, which combines high unemployment benefits with low job protection and high participation rate, relies on strong public-spiritedness. We also argue that Continental and Mediterranean European countries are unlikely to be able to implement the Danish Model because the lack of public-spiritedness of their citizens raises moral hazard issues which hinder the implementation of efficient public unemployment insurance.