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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. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
    2. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
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    4. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    5. Kanbur, R. & Keen, M. & Tuomala, M., 1990. "Optimal Non-Linear Income Taxation for the Alleviation of Income Poverty," The Warwick Economics Research Paper Series (TWERPS) 368, University of Warwick, Department of Economics.
    6. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," Working Papers 9902, Harris School of Public Policy Studies, University of Chicago.
    7. Sinn, Hans-Werner, 1996. "Social Insurance, Incentives and Risk Taking," Munich Reprints in Economics 19834, University of Munich, Department of Economics.
    8. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059, March.
    9. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
    10. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323, March.
    11. Tuomala, Matti, 1984. "On the optimal income taxation : Some further numerical results," Journal of Public Economics, Elsevier, vol. 23(3), pages 351-366, April.
    12. Raquel Fernandez & Richard Rogerson, 1994. "On the political economy of education subsidies," Staff Report 185, Federal Reserve Bank of Minneapolis.
    13. Geoffrey Brennan, 1973. "Pareto desirable redistribution: The non-altruistic dimension," Public Choice, Springer, vol. 14(1), pages 43-67, March.
    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.
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