Social Insurance and Occupational Mobility
German Cubas () and
Pedro Silos ()
MPRA Paper from University Library of Munich, Germany
This paper studies how insurance from progressive taxation improves the matching of workers to occupations. We propose an equilibrium dynamic assignment model to illustrate how social insurance encourages mobility. Workers experiment to find their best occupational fit in a process filled with uncertainty. Risk aversion and limited earnings insurance induce workers to remain in unfitting occupations. We estimate the model using microdata from the United States and Germany. Higher earnings uncertainty explains the U.S. higher mobility rate. When workers in the United States enjoy Germany’s higher progressivity, mobility rises. Output and welfare gains are large.
Keywords: Progressive Taxation; Social Insurance; Occupational Choice (search for similar items in EconPapers)
JEL-codes: E21 H24 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-exp, nep-ias, nep-lma, nep-mac and nep-pub
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https://mpra.ub.uni-muenchen.de/83020/1/MPRA_paper_83020.pdf original version (application/pdf)
Journal Article: SOCIAL INSURANCE AND OCCUPATIONAL MOBILITY (2020)
Working Paper: Social Insurance and Occupational Mobility (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83020
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