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Welfare regimes and the incentives to work and get educated

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  • Andrés Rodríguez-Pose

    ()
    (IMDEA Social Sciences Institute)

  • Vassilis Tselios

    ()
    (University of Newcastle upon Tyne)

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 Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2011-01.

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Date of creation: 05 Jan 2011
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Publication status: Published in Environment and Planning A 44(1), January 2012: 125-149
Handle: RePEc:imd:wpaper:wp2011-01

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Keywords: education; employment; wages; welfare; regions; European Union;

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  1. Andrés Rodríguez-Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437.
  2. Andrés Rodríguez-Pose & Vassilis Tselios, 2007. "Mapping the European regional educational distribution: Educational attainment and inequality," Working Papers 2007-18, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
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  11. Heinemann, Friedrich, 2007. "Is the Welfare State Self-destructive? A Study of Government Benefit Morale," ZEW Discussion Papers 07-029, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-98, December.
  13. Andrés Rodríguez-Pose & Vassilis Tselios, 2012. "Individual Earnings and Educational Externalities in the European Union," Regional Studies, Taylor & Francis Journals, vol. 46(1), pages 39-57, February.
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  22. Timothy J. Bartik, . "Spillover Effects of Welfare Reforms in State Labor Markets," Upjohn Working Papers and Journal Articles tjb2002jrs, W.E. Upjohn Institute for Employment Research.
  23. Esping-Andersen, Gosta, 1999. "Social Foundations of Postindustrial Economies," OUP Catalogue, Oxford University Press, number 9780198742005, October.
  24. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
  25. Andrés Rodríguez-Pose & Vassilis Tselios, 2010. "Returns to Migration, Education, and Externalities in the European Union," Working Papers 2010.25, Fondazione Eni Enrico Mattei.
  26. Ronald Schettkat, 2003. "Are institutional rigidities at the root of European unemployment?," Cambridge Journal of Economics, Oxford University Press, vol. 27(6), pages 771-787, November.
  27. Andrés Rodríguez-Pose & Montserrat Vilalta-Bufi, 2004. "Education, Migration, and Job Ssatisfaction: the Regional Returns of Human Capital in the EU," Bruges European Economic Research Papers 1, European Economic Studies Department, College of Europe.
  28. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," Working Paper Series 428, Research Institute of Industrial Economics.
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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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