Today’s post provides a sort of commentary on our last one about Italy. It’s about the relationship between family culture and the labour market.

Economists and demographers are always banging on about how the southern European countries have lower birth rates than, say, France, Britain and Scandinavia, because they have fewer opportunities for women to work and raise families at the same time. One wage means less income and fewer children, apparently.

Economists also point out that countries such as Italy and Spain have inflexible labour markets -- rigid rules on hiring and firing and on the minimum wage -- which account for their high unemployment and slow economic growth. Workers unions and their political power partly explain this.

But a group of economists has produced a paper suggesting that deeper cultural factors maybe at play in countries nearer the Mediterranean:

In their cross-country comparison, the researchers found a correlation between close family ties and a preference for more regulated labor markets. In countries with weaker family ties, there was more support for more open labor markets.

Both ways of doing things are rational, they point out.

Here is how Giuliano, an assistant professor at the University of California at Los Angeles, Anderson School of Management, explained the trade-offs: “Suppose you live in a strong family tie society. You don’t want to go far away from home, so you are tied to a certain geographical location. The company that dominates a specific area knows you don’t want to leave to search for a better job, so it offers you a low wage. For that reason, people in those societies may prefer more regulated labor markets.”

Another study suggests that high unemployment in these countries is tolerated better because the extended family provides a safety net, although at the same time that family support may delay the flexible market solutions that would (might?) employ more people.

Ms Giulianao, quoted above, believes the southern Europeans need to free up their job markets but she warns that you have to be careful how you mess with people’s culture when it goes back centuries -- as the family structure of these countries trends to.

The writer of the Reuters article suggests that aeroplanes, Facebook and Skype -- i.e. technology -- could make up for greater mobility and separation from family in the pursuit of work. Maybe.

I’m no economist but like everyone else I have a family and I do think that the dispersal of families can go too far. The nuclear family needs the extended family, particualrly when children are young and when adults grow old. Why is it any better to leave it to a daycare centre or a nursing home?

Also, the price of flexible labour markets and keeping women in the workforce while they become mothers appears to have been, in the northern European countries referred to earlier, a big and very bossy state, supported by high taxes. Parents complain that they have no time for family life, and kids are unduly influenced by peer pressure.

It seems a good thing to me for families to look after their own. I’ll have to keep thinking about the economic side of it.

Source: “Close families, closed labour markets,” by Chrystia Freeland, Reuters, June 15