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On Labor Policies Affecting Investment in General Human Capital
Author(s) -
Sato Yasuhiro,
Sugiura Hiroaki
Publication year - 2003
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1121-7081.2003.00254.x
Subject(s) - human capital , subsidy , economics , labour economics , unemployment , distortion (music) , comparative statics , investment (military) , physical capital , capital (architecture) , microeconomics , market economy , macroeconomics , history , amplifier , archaeology , cmos , electronic engineering , politics , political science , law , engineering
. 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.