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Social Insurance and Occupational Mobility

German Cubas () and Pedro Silos ()

No 1802, DETU Working Papers from Department of Economics, Temple University

Abstract: 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)
Date: 2018-02
New Economics Papers: this item is included in nep-dge, nep-exp, nep-ias, nep-lma, nep-ltv and nep-mac
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http://www.cla.temple.edu/RePEc/documents/DETU_18_02.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: SOCIAL INSURANCE AND OCCUPATIONAL MOBILITY (2020) Downloads
Working Paper: Social Insurance and Occupational Mobility (2017) Downloads
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