Empirically, disincentive effects on work of generous welfare state arrangements tend to appear with a substantial time lag. One explanation is that norms concerning work and benefit dependency delay such effects. We model altruistic parents' economic incentives for instilling such work norms in their children. Anticipated economic support from parents may reduce work effort, and parental altruism makes threats to withdraw such support noncredible. Instilling norms mitigates this problem. However, generous social insurance arrangements tend to weaken parents' incentives to instill such norms in their children. We find empirical support for this prediction.

This paper analyzes the interplay between social norms and economic incentives in the context of work decisions in the modem welfare state. We assume that to live off one's own work is a social norm, and that the larger the population share adhering to this norm, the more intensely it is felt by the individual. Individuals face two choices: one economic, whether to work or live off public transfers; and one political, how large the transfer should be. The size of the transfer and the intensity of the social norm are determined endogenously in equilibrium.