On the (Ir)relevance of skill specificity for social insurance

Jerry Nickelsburg, Jeffrey Timmons

Research output: Contribution to journalArticle

Abstract

The relationship between specific skills and the welfare state has been the subject of considerable debate. To help resolve the conflict, we present a general model of preferences over social insurance with endogenous wages and investment in specific skills and a variety of exogenous constraints. Our dynamic model underscores the link between wages, skills and unemployment risks. It shows that skillspecificity is irrelevant for preferences over social insurance when wages adjust for investment costs and unemployment risks. We validate the adjustment mechanism with U.S. data. We then extend the model to show how different conditions, including centralized wage bargaining, capital market imperfections, and taxation, affect skill formation and skill-based preferences for social insurance. Our model provides an analytical framework that can reconcile the disparate empirical findings and demonstrates how they, along with Iversen and Soskice's seminal results, are special cases of the interaction between labor markets and politics.

Original languageEnglish (US)
Pages (from-to)35-67
Number of pages33
JournalQuarterly Journal of Political Science
Volume7
Issue number1
DOIs
StatePublished - Mar 1 2012

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social insurance
wage
unemployment
capital market
taxation
welfare state
labor market
politics
costs
interaction

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations

Cite this

On the (Ir)relevance of skill specificity for social insurance. / Nickelsburg, Jerry; Timmons, Jeffrey.

In: Quarterly Journal of Political Science, Vol. 7, No. 1, 01.03.2012, p. 35-67.

Research output: Contribution to journalArticle

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