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Social Protection and Human Capital: Test of a Hypothesis

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  • Sauro Mocetti

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Abstract

The claim of this paper is to investigate the relationship between social protection and the investment in human capital. The idea is that investment in human capital is risky and therefore, as a prerequisite, needs some kind of protection as insurance. Investments in specific human capital, in particular, are very risky and require a special protection so as not to be avoided. An attempt is made to study the micro foundations of this relationship in depth which afterwards moves on to a macroeconomic analysis. Here a strong link is found between the levels and types of social protection and the skill profiles of a country (as predicted). The clusters we find seem to be in accordance with existing literature on ‘varieties of capitalism’. The last stage of this work is a hypothesis in the opposite direction of the nexus: how the choices of workers and firms influence the institutional framework (endogeneity of institutions of the welfare state). The result of this network of relations seems to be the formation of several organizational equilibria (and not a global convergence) in which institutions shape agents’ behaviour and, at the same time, agents, through their policy preferences, reinforce existing institutional infrastructures.

Suggested Citation

  • Sauro Mocetti, 2004. "Social Protection and Human Capital: Test of a Hypothesis," Department of Economics University of Siena 425, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:425
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    File URL: http://repec.deps.unisi.it/quaderni/425.pdf
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    References listed on IDEAS

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    1. Tito Boeri & Giuseppe Nicoletti & Stefano Scarpetta, "undated". "Regulation and Labour Market Performance," Working Papers 158, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    3. Hans-Werner Sinn, 1996. "Social insurance, incentives and risk taking," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 259-280, July.
    4. Pagano, Ugo, 1991. "Property Rights, Asset Specificity, and the Division of Labour under Alternative Capitalist Relations," Cambridge Journal of Economics, Oxford University Press, vol. 15(3), pages 315-342, September.
    5. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    6. Snower, Dennis J., 1994. "The Low-Skill, Bad-Job Trap," CEPR Discussion Papers 999, C.E.P.R. Discussion Papers.
    7. Atkinson,Anthony Barnes, 1996. "Incomes and the Welfare State," Cambridge Books, Cambridge University Press, number 9780521557962, October.
    8. Eichengreen, Barry & Iversen, Torben, 1999. "Institutions and Economic Performance: Evidence from the Labour Market," Oxford Review of Economic Policy, Oxford University Press, vol. 15(4), pages 121-138, Winter.
    9. Schömann, Klaus & Flechtner, Stefanie & Mytzek, Ralf & Schömann, Isabelle, 2000. "Moving towards employment insurance: Unemployment insurance and employment protection in the OECD," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 00-201, Social Science Research Center Berlin (WZB).
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    12. repec:cup:apsrev:v:95:y:2001:i:04:p:875-893_40 is not listed on IDEAS
    13. D'Antoni, Massimo & Pagano, Ugo, 2002. "National cultures and social protection as alternative insurance devices," Structural Change and Economic Dynamics, Elsevier, vol. 13(4), pages 367-386, December.
    14. Bird, Edward J., 2001. "Does the welfare state induce risk-taking?," Journal of Public Economics, Elsevier, vol. 80(3), pages 357-383, June.
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    More about this item

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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