UI and Investment in Task-Specic Skills: Evidence from Experiments

• In Event: Experimental Approaches to Taxation and Redistribution

Abstract

The concept of ‘skill specificity’ has been core in many recent political economy studies of risk, unemployment, and attitudes towards social insurance. In
particular, scholars have argued that individuals will only make costly investments in specific skills when they are insured against the risks of unemployment
and redeployment in tasks that do not utilize those skills (Estevez-Abe et al., 2001; Iversen and Soskice, 2001). However, we have little evidence at
the micro-level that individuals actually respond to different risk and insurance environments by choosing to - or not to - invest in specific skills. This article
provides the first experimental analysis of the effects of unemployment risk and insurance on specific skills investment, using both laboratory and online
samples. We find evidence that higher levels of insurance do appear to incentivize making investments in specific skills and that those individuals who make investments also appear to engage in more effort in their tasks.

Authors

• John Stephen Ahlquist, University of California, San Diego

• Ben William Ansell, University of Oxford