Welfare Regimes and the Incentives to Work and Get Educated

30 Pages Posted: 18 Jan 2011

See all articles by Andrés Rodríguez-Pose

Andrés Rodríguez-Pose

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Vassilis Tselios

London School of Economics & Political Science (LSE) - Department of Economics; Newcastle University - Centre for Urban and Regional Development Studies

Date Written: January 1, 2011

Abstract

This paper examines whether differences in welfare regimes shape the incentives to work and get educated. Using microeconomic data for more than 100,000 European individuals, the results show that welfare regimes make a difference for wages and education. First, people- and household-based effects (internal returns to education and household wage and education externalities) generate socioeconomic incentives for people to get an education and work, which are stronger in countries with the weakest welfare systems, i.e. those with what is known as Residual welfare regimes (Greece, Italy, Spain and Portugal). Second, place-based effects, and more specifically differences in regional wage per capita and educational endowment and in regional interpersonal income and educational inequality, also influence wages and education in different ways across welfare regimes. Place-based effects have the greatest incidence in the Nordic Social-Democratic welfare systems. These results are robust to the inclusion of a large number of people- and place-based controls.

Keywords: Education, Employment, European Union, Regions, Wages, Welfare

JEL Classification: H53, H75, I31, I38, J38

Suggested Citation

Rodríguez-Pose, Andrés and Tselios, Vassilis, Welfare Regimes and the Incentives to Work and Get Educated (January 1, 2011). CEPR Discussion Paper No. DP8187. Available at SSRN: https://ssrn.com/abstract=1742731

Andrés Rodríguez-Pose (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Vassilis Tselios

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Newcastle University - Centre for Urban and Regional Development Studies

Newcastle NE1 7RU
United Kingdom

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