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Human capital, technical change and the welfare state

Author

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  • Ronald Benabou

    (Princeton University, Institute for Advanced Study, CEPR, NBER and IRP)

Abstract

I study the interactions between the distribution of human capital, technological choice, and redistributive institutions. I first ask what makes alternative social contracts such as a European-style "welfare state" and US-style "laissez-faire" sustainable, and in particular how each is affected by skill-biased technical change. I then endogenize technological or organizational choice, and show that firms respond to greater human capital heterogeneity with more flexible technologies that further exacerbate wage equality. I then analyze the simultaneous determination of technology, income distribution, and redistributive institutions, and as well as spillovers between the social contracts of different countries.

Suggested Citation

  • Ronald Benabou, 2002. "Human capital, technical change and the welfare state," Temi di discussione (Economic working papers) 465, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_465_02
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    inequality; welfare state; technical change; skill bias; human capital; redistribution; social contract;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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