Abstract
In this paper we use European Social Survey (2012) microdata from 23 countries to assess the relationship between culture a person is facing at work and the probability of experiencing long- term unemployment by this person. The cultural factors that are tested are: the degree of freedom at work and influence on managerial decisions, which are treated as an indication of the level of power distance. The hypothesis is that low power distance culture encourages employees to gain more hard and soft skills as more responsibility is delegated to them. In our research we follow the concept that cultural factors are among root causes of economic outcomes. The low power distance approach to a subordinate resembles methods applied by personalized Active Labour Market Policies. Both approaches intend to make people aware of their responsibility for their economic outcomes and their power to improve these outcomes. The logit model proved a statistical significance of a relationship between cultural variables and probability of being long-term unemployed even after controlling for age, education, type of work, country and other control variables.
Highlights
Does low Power Distance Culture Contribute to Lower Long Term Unemployment?What lies behind the low power distance ‘’managerial thinking’’ is that subordinates are not expected be ‘’meek and obedient’’ but on the contrary, they are expected to be responsible for their work to as high degree as possible, even if it means disagreement with a boss
The hypothesis is that low power distance type of relationship may benefit subordinates in the way that in the end it reduces their probability of being unemployed in the long-term
When comparing long-term unemployment rate with the Power Distance Index (PDI) one can notice that countries with low PDI usually had low average unemployment rate (Figure 1)
Summary
What lies behind the low power distance ‘’managerial thinking’’ is that subordinates are not expected be ‘’meek and obedient’’ but on the contrary, they are expected to be responsible for their work to as high degree as possible, even if it means disagreement with a boss. High power distance ‘’managerial thinking’’ assumes that an average person prefers to be told what to do and wants to avoid responsibility Such two opposite points of view are considered in terms of reasons for unemployment. Some governments in their fight with unemployment put emphasis on a more personalized approach to unemployed with the use of Active Labour Market Programmes [6] These policies have an underlying assumption that the unemployment is to a greater extent a consequence of individual’s shortcomings [3]. Franke et al [9] claim that cultural values explain more than half of cross national variance in economic growth in their sample
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