Human capital, technical change and the welfare state

Ronald Benabou (rbenabou@princeton.edu)
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Ronald Benabou: Princeton University, Institute for Advanced Study, CEPR, NBER and IRP

No 465, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: I study the interactions between the distribution of human capital, technological choice, and redistributive institutions. I first ask what makes alternative social contracts such as a European-style "welfare state" and US-style "laissez-faire" sustainable, and in particular how each is affected by skill-biased technical change. I then endogenize technological or organizational choice, and show that firms respond to greater human capital heterogeneity with more flexible technologies that further exacerbate wage equality. I then analyze the simultaneous determination of technology, income distribution, and redistributive institutions, and as well as spillovers between the social contracts of different countries.

Keywords: inequality; welfare state; technical change; skill bias; human capital; redistribution; social contract (search for similar items in EconPapers)
JEL-codes: D31 H10 J3 O33 (search for similar items in EconPapers)
Date: 2002-12
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_465_02

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