Firms and the Welfare State: A Test of Employer Support for Economic Security

During the 20th century, Western nations have adopted socialprotection as a way to stem conflict between capital and labor, and toensure economic growth. Measures such as employment protection,unemployment insurance, and wage bargaining have helped pave theway for an era of social stability in Europe and the United States. Using France and Germany as cases, Watson plans to test this idea byanalyzing data from the stock market. Specifically, she is looking atwhat happens to a company's stock price when social protectionmeasures are passed. Her idea is that the type of skills a companyrequires from its labor force will determine how its share priceresponds to protectionist legislation because such laws affect theincentives for workers to invest in different types of skills.