Preferences for Reforms: Endowments vs. Beliefs

Abstract

Are preferences for reforms driven by individuals' own endowments or beliefs? To address this question, we conducted a cross-country survey on people's opinions on employment protection legislation-an area where reform has proven to be difficult and personal interests are at stake. We find that individuals' beliefs matter more than their own endowments and personal pay-offs. A randomized information treatment confirms that beliefs explain views about reform, but beliefs can change with new information. Our results are robust to several robustness tests, including to alternative estimation techniques and samples.

Keywords: beliefs, employment protection, Ideology, political economy, political opinions, preferences, Regulation, Surveys

JEL Classification: D70, D72, J08, J65