Salience of social security contributions and employment

Social security contributions in most countries are split between employers and employees. According to standard incidence analysis, social security contributions affect employment negatively, but it is irrelevant how they are divided between employers and employees. This paper considers the possibility that (i) workers perceive a linkage between current contributions and future benefits, and (ii) they value employer’s contributions less than own contributions, as the former are less “salient.” Under these assumptions, I find that employers’ contributions have a stronger (negative) effect on employment than employees’ contributions. Furthermore, a change in how contributions are divided, which reduces the share of employers, is beneficial for employment. Finally, making employers’ contributions more visible to workers also has a positive effect on employment.Financial support from Instituto Valenciano de Investigaciones Económicas, Generalitat Valenciana (Prometeo/2013/037) and Ministerio de Economía y Competitividad (ECO2012-34928) are gratefully acknowledged

State education as high-yield investment: human capital theory in European policy discourse

Human Capital Theory has been an increasingly important phenomenon in economic thought over the last 50 years. The central role it affords to education has become even more marked in recent years as the concept of the ‘knowledge economy’ has become a global concern. In this paper, the prevalence of Human Capital Theory within European educational policy discourse is explored. The paper examines a selection of policy documents from a number of disparate European national contexts and considers the extent to which the ideas of Human Capital Theory can be seen to be influential. In the second part of the paper, the implications of Human Capital Theory for education are considered, with a particular focus on the possible ramifications at a time of economic austerity. The paper argues that Human Capital Theory risks offering a diminished view of the person, a diminished view of education, but that with its sole focus on economic goals leaves room for educationists and others to argue for the educational, social, and moral values it ignores, and for the conception of the good life and good society it fails to mention

How many educated workers for your economy? European targets, optimal public spending, and labor market impact

This paper studies optimal taxation schemes for education in a search- matching model where the labor market is divided between a high-skill and a low-skill sector. Two public policy targets - maximizing the total employment level and optimizing the social surplus - are studied according to three different public taxation strategies. We calibrate our model using evidence from thirteen European countries, and compare our results with the target from the Europe 2020 Agenda for achievement in higher education. We show that, with current labor market char- acteristics, the target set by governments seems compatible with the social surplus maximization objective for some countries, while being too high for other countries. For all countries, maximizing employment would imply higher educational spending than that required for the social surplus to reach its maximum.info:eu-repo/semantics/publishedVersio

The Job Search Intensity Supply Curve: How Labor Market Conditions Affect Job Search Effort

During the Great Recession of 2007, unemployment reached nearly 10 percent and the ratio of unemployment to open positions (as measured by the Help Wanted OnLine Index) more than tripled. The weak labor market prompted an unprecedented extension in the length of time in which a claimant can collect unemployment insurance (UI) to 99 weeks, at an expense to date of $226.4 billion. While many claim that extending UI during a recession will reduce search intensity, the effect of weak labor market conditions on search remains a mystery. As a result, policymakers are in the dark as to whether UI extensions reduce already low search effort during recessions or perhaps decrease excessive search, which causes congestion in the labor market. At the same time, modelers of the labor market have little empirical justification for their assumptions on how search intensity changes over the business cycle. This paper develops a search model where the impact of macro labor market conditions on a worker’s search effort depends on whether these two factors are substitutes or complements in the job search process. Parameter estimates of the structural model using a sample of unemployment spells from the National Longitudinal Survey of Youth 1997 indicate that macro labor market conditions and individual search effort are complements and move together over the business cycle. The estimation also reveals that more risk-averse and less wealthy individuals exhibit less search effort