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Social Protection and Human Capital: Test of a Hypothesis

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  • Sauro Mocetti

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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    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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