DP7838 Social Insurance, Education, and Work Ethics

Author(s): Mark Gradstein
Publication Date: May 2010
Keyword(s): education policies, moral hazard, social insurance
JEL(s): H1, I22
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7838

This research shows that moral hazard associated with extant social insurance arrangements causes underinvestment in human capital, because of government?s inability to commit to welfare policies. It then argues that education policies, such as education subsidies or direct public investment in education, may achieve a second best and also help alleviating the deterioration of work norms.