Human capital, technical change and the welfare state

I study the interactions between the distribution of human capital, technological choice, and redistributive institutions. I first ask what makes alternative social contracts such as a European-style "welfare state" and US-style "laissez-faire" sustainable, and in particular how each is affected by skill-biased technical change. I then endogenize technological or organizational choice, and show that firms respond to greater human capital heterogeneity with more flexible technologies that further exacerbate wage equality. I then analyze the simultaneous determination of technology, income distribution, and redistributive institutions, and as well as spillovers between the social contracts of different countries.inequality, welfare state, technical change, skill bias, human capital, redistribution, social contract

The theory of the firm and its critics: a stocktaking and assessment

Includes bibliographical references."Prepared for Jean-Michel Glachant and Eric Brousseau, eds. New Institutional Economics: A Textbook, Cambridge, Cambridge University Press.""This version: August 22, 2005."Since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm

Raising Children to Work Hard: Altruism, Work Norms, and Social Insurance

Empirically, disincentive effects on work of generous welfare state arrangements tend to appear with a substantial time lag. One explanation is that norms concerning work and benefit dependency delay such effects. We model altruistic parents' economic incentives for instilling such work norms in their children. Anticipated economic support from parents may reduce work effort, and parental altruism makes threats to withdraw such support noncredible. Instilling norms mitigates this problem. However, generous social insurance arrangements tend to weaken parents' incentives to instill such norms in their children. We find empirical support for this prediction. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.