Discussion Paper Details

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Title: Welfare regimes and the incentives to work and get educated

Author(s): Andrés Rodríguez-Pose and Vassilis Tselios

Publication Date: January 2011

Keyword(s): Education, Employment, European Union, Regions, Wages and Welfare

Programme Area(s): International Trade and Regional Economics

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.

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Bibliographic Reference

Rodríguez-Pose, A and Tselios, V. 2011. 'Welfare regimes and the incentives to work and get educated'. London, Centre for Economic Policy Research.