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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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    File URL: http://econstor.eu/bitstream/10419/31980/1/500244294.pdf
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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
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    Handle: RePEc:zbw:cegedp:48
    Contact details of provider: Postal: Platz der Göttinger Sieben 3, 37073 Göttingen
    Web page: http://www.cege.wiso.uni-goettingen.de/

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    1. Schneeweis, Nicole & Winter-Ebmer, Rudolf, 2005. "Peer Effects in Austrian Schools," CEPR Discussion Papers 5018, C.E.P.R. Discussion Papers.
    2. Kanbur, Ravi & Keen, Michael & Tuomala, Matti, 1994. "Optimal non-linear income taxation for the alleviation of income-poverty," European Economic Review, Elsevier, vol. 38(8), pages 1613-1632, October.
    3. Hans-Werner Sinn, 1996. "Social insurance, incentives and risk taking," International Tax and Public Finance, Springer, vol. 3(3), pages 259-280, July.
    4. 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.
    5. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
    6. Tuomala, Matti, 1984. "On the optimal income taxation : Some further numerical results," Journal of Public Economics, Elsevier, vol. 23(3), pages 351-366, April.
    7. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," JCPR Working Papers 61, Northwestern University/University of Chicago Joint Center for Poverty Research.
    8. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059, March.
    9. Geoffrey Brennan, 1973. "Pareto desirable redistribution: The non-altruistic dimension," Public Choice, Springer, vol. 14(1), pages 43-67, March.
    10. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
    11. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
    12. Fernandez, Raquel & Rogerson, Richard, 1995. "On the Political Economy of Education Subsidies," Review of Economic Studies, Wiley Blackwell, vol. 62(2), pages 249-62, April.
    13. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323, March.
    14. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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