Economics Breeds Culture
UB Economics Working Papers E14/312
36 Pages Posted: 30 May 2014
Date Written: May 6, 2014
Several recent papers document the influence and long lasting effects of technology on preferences. Simultaneously, cultural factors are often invoked to explain heterogeneity in preferences. These two ideas suggest that culture determines the short run equilibrium values of economic variables, but, in the long run, culture changes in response to the underlying economic fundamentals. We build a model in which preferences are endogenous and the diversity in preferences (the "cultural" diversity) is explained by the variation in the relevant economic fundamentals. This can help explain observed differences in labor market attachment among groups defined e.g., by citizenship, ethnicity or gender.
Keywords: Endogenous Preferences, Technology, Culture, Labor market participation, Taxes
JEL Classification: D01, J22, J3, Z10
Suggested Citation: Suggested Citation