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

  • Rincke, Johannes
  • Schwager, Robert
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    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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    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
    Date of revision:
    Handle: RePEc:zbw:cegedp:48
    Contact details of provider: Postal: Platz der Göttinger Sieben 3, 37073 Göttingen
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    1. Nicole Schneeweis & Rudolf Winter-Ebmer, 2005. "Peer effects in Austrian schools," Economics working papers 2005-02, Department of Economics, Johannes Kepler University Linz, Austria.
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    8. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323, July.
    9. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    10. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059, July.
    11. Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 249-262.
    12. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
    13. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
    14. 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.
    15. Geoffrey Brennan, 1973. "Pareto desirable redistribution: The non-altruistic dimension," Public Choice, Springer, vol. 14(1), pages 43-67, March.
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