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On Labor Policies Affecting Investment in General Human Capital

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  • Yasuhiro Sato
  • Hiroaki Sugiura

Abstract

. This paper develops a search model including workers’ investments in general human capital and investigates the effects of labor policies such as subsidies to human capital investment and unemployment benefits on the accumulation of human capital. It is shown that the equilibrium is not optimal because workers underinvest in human capital or firms open too many vacancies in comparison with the number of unemployed workers. Comparative statics show that an increase in subsidies to human capital investment adds to the number of vacancies per unemployed worker and to workers’ investments in human capital and that an increase in unemployment benefits decreases them. Finally, labor policies that remove the distortion are explored.

Suggested Citation

  • Yasuhiro Sato & Hiroaki Sugiura, 2003. "On Labor Policies Affecting Investment in General Human Capital," LABOUR, CEIS, vol. 17(4), pages 599-622, December.
    • Handle: RePEc:bla:labour:v:17:y:2003:i:4:p:599-622
    DOI: 10.1111/j.1121-7081.2003.00254.x
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    References listed on IDEAS

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    Cited by:

    1. Manger, Christian, 2020. "The strategic overuse of student loans," Labour Economics, Elsevier, vol. 66(C).
    2. Sato, Yasuhiro, 2004. "City structure, search, and workers' job acceptance behavior," Journal of Urban Economics, Elsevier, vol. 55(2), pages 350-370, March.
    3. Stähler Nikolai, 2006. "Employment Protection: Its Effects on Different Skill Groups and on the Incentive to become Skilled," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 41-54, February.
    4. Christian Lumpe & Benjamin Weigert, 2009. "Immigration Policy, Equilibrium Unemployment, and Underinvestment in Human Capital," LABOUR, CEIS, vol. 23(1), pages 97-130, March.

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