Social Protection and Human Capital: Test of a Hypothesis
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.
|Date of creation:||Apr 2004|
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