Civic beliefs, such as trust and trustworthiness, are essential for a well-functioning society. Recent research has established the importance of these beliefs for economic success at the macro level. Yet, little quantitative evidence exists on the drivers of civic beliefs, and in turn how civic beliefs affect economic outcomes. In this project, mechanisms are estimated at the individual level. Understanding the channels at the micro-level is essential for designing policy to promote a civic and prosperous society.
This project examines empirically the formation of civic beliefs, how cultural norms change and affect benefit up take, and how civic beliefs influence human capital accumulation, labor supply, entrepreneurship, and earnings. A novel method that speaks to the causes behind civic belief formation as well as how the cultural background affects economic outcomes is applied; these are areas where the method has not been applied before. The formation of beliefs and the economic outcomes are studied among second-generation immigrants in a wide set of European countries. Furthermore, the evolution of work norms and sick leave over decades in Sweden are studied in a structural economic model. The structural model is fit to Swedish registry data to understand the long-run dynamics of benefit use in the Swedish welfare state. The estimated structural model is used to conduct counterfactual policy experiments of changes in social insurance program rules and generosity.
The project addresses several questions that are high on the political agenda in Sweden and Europe. The economic and cultural assimilation of immigrants is important both for improving individual well-being and for flourishing societies. Learning about the long run dynamics in the Swedish welfare state is essential for guarding the fiscal sustainability of a large public sector.