Working Paper: CEPR ID: DP7838
Authors: Mark Gradstein
Abstract: 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.
Keywords: education policies; moral hazard; social insurance
JEL Codes: H1; I22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social insurance (H55) | moral hazard (G52) |
| moral hazard (G52) | underinvestment in human capital (J24) |
| social insurance (H55) | underinvestment in human capital (J24) |
| government policies (H59) | human capital investment (J24) |
| equilibrium tax rate (H21) | human capital investment (J24) |
| education subsidies (H52) | human capital investment (J24) |