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Skills, social mobility, and the support for the welfare state

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  • Rincke, Johannes
  • Schwager, Robert
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    Abstract

    Many welfare schemes discourage low skilled individuals from working. In the same time, there is widespread support for the welfare state among the highly educated. We suggest a model which explains these seemingly contrasting observations. In our approach, intergenerational social mobility is conditional on labour market participation of the parents. Such mobility increases the supply of high skilled labour in the next generation. To protect their children from the associated fall in wages, middle class parents have an incentive to induce unemployment among low skilled parents, and therefore vote for a social transfer. --

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    Bibliographic Info

    Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 48.

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    Date of creation: 2005
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    Handle: RePEc:zbw:cegedp:48

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    Web page: http://www.cege.wiso.uni-goettingen.de/
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    Related research

    Keywords: political preferences; unemployment; voting; social mobility; welfare state;

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    1. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323.
    2. Schneeweis, Nicole & Winter-Ebmer, Rudolf, 2005. "Peer Effects in Austrian Schools," CEPR Discussion Papers 5018, C.E.P.R. Discussion Papers.
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    6. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
    7. Hans-Werner Sinn, 1996. "Social insurance, incentives and risk taking," International Tax and Public Finance, Springer, vol. 3(3), pages 259-280, July.
    8. Margit Kraus, 2004. "Social Security Strategies and Redistributive Effects in European Social Transfer Systems," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 431-457, 09.
    9. Tuomala, Matti, 1984. "On the optimal income taxation : Some further numerical results," Journal of Public Economics, Elsevier, vol. 23(3), pages 351-366, April.
    10. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059.
    11. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
    12. Raquel Fernandez & Richard Rogerson, 1994. "On the political economy of education subsidies," Staff Report 185, Federal Reserve Bank of Minneapolis.
    13. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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