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Unemployment benefits, job protection, and the nature of educational investment

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  • Decreuse, Bruno
  • Granier, Pierre
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    Abstract

    This paper examines the impact of labor market institutions covering the risk of unemployment on the nature of educational investment. We offer a matching model of unemployment in which individuals of a given education determine the scope (or adaptability) and intensity (or productivity) of their human capital before entering the labor market. Our model features an increasing relationship between match surplus and the return to adaptability skills. This relationship explains why matching frictions promote adaptability skills instead of productivity skills, and why unemployment benefits and job protection create the incentive for productivity skill acquisition.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0927537113000286
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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 23 (2013)
    Issue (Month): C ()
    Pages: 20-29

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    Handle: RePEc:eee:labeco:v:23:y:2013:i:c:p:20-29

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    Web page: http://www.elsevier.com/locate/labeco

    Related research

    Keywords: Matching frictions; Education; Adaptability skills; Labor market institutions;

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