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Welfare regimes and the incentives to work and get educated

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  • Rodríguez-Pose, Andrés
  • Tselios, Vassilis

Abstract

This paper examines whether differences in welfare regimes shape the incentives to work and get educated. Using microeconomic data for more than 100,000 European individuals, the results show that welfare regimes make a difference for wages and education. First, people- and household-based effects (internal returns to education and household wage and education externalities) generate socioeconomic incentives for people to get an education and work, which are stronger in countries with the weakest welfare systems, i.e. those with what is known as ‘Residual’ welfare regimes (Greece, Italy, Spain and Portugal). Second, place-based effects, and more specifically differences in regional wage per capita and educational endowment and in regional interpersonal income and educational inequality, also influence wages and education in different ways across welfare regimes. Place-based effects have the greatest incidence in the Nordic Social-Democratic welfare systems. These results are robust to the inclusion of a large number of people- and place-based controls.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8187.

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Date of creation: Jan 2011
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Handle: RePEc:cpr:ceprdp:8187

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Keywords: Education; Employment; European Union; Regions; Wages; Welfare;

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  1. Andrés Rodríguez-Pose & Vassilis Tselios, 2009. "Individual earnings and educational externalities in the European Union," Working Papers 2009-07, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
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Cited by:
  1. Tsatsos, Aristidis, 2011. "Working in Southern Europe in Times of Crisis – Myths and Demons," MPRA Paper 45237, University Library of Munich, Germany, revised Jul 2011.

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