nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2005‒12‒09
23 papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. Human Capital, the Structure of Production, and Growth By Ciccone, Antonio; Papaioannou, Elias
  2. Learning to be an Entrepreneur By Guiso, Luigi; Schivardi, Fabiano
  3. Skills, human capital and the plant productivity gap: UK evidence from matched plant, worker and workforce data By Haskel, Jonathan; Hawkes, Denise; Pereira, Sonia
  4. Skill-biased Technical Change and the Relative Pay and Employment of Men and Women in the UK Economy 1971 – 1991 By Martin Hoskins
  5. Regional Disparities and Inequality of Opportunity: The Case of Italy By Daniele Checchi; Vitorocco Peragine
  6. Guide to Reform of Higher Education: A European Perspective By Jacobs, Bas; van der Ploeg, Frederick
  7. An evaluation of labour market forecasts by type of education and occupation for 2002 By Dupuy,Arnaud
  8. Growth and Entrepreneurship: An Empirial Assessment By Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
  9. The Knowledge Spillover Theory of Entrepreneurship By Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
  10. Entrepreneurial Access and Absorption of Knowledge Spillovers: Strategic Board and Managerial Composition for Competitive Advantage By Audretsch, David B; Lehmann, Erik E
  11. Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland By Lorentowicz, Andzelika; Marin, Dalia; Raubold, Alexander
  12. International Capital Market Integration, Educational Choice and Economic Growth By Hartmut Egger; Peter Egger; Josef Falkinger; Volker Grossmann
  13. Does Training Trigger Turnover...or Not? By Sieben,Inge
  14. Job-worker Mismatch and Cognitive Decline By Grip,Andries,de; Bosma,Hans; Willems,Dick; Boxtel,Martin,van
  15. Introducing Time-to-Educate in a Job Search Model By Sascha O. Becker
  16. Subsidizing Enjoyable Education By Robert A. J. Dur; Amihai Glazer
  17. From the Cradle to the Labor Market? The Effect of Birth Weight on Adult Outcomes By Sandra E. Black; Paul J. Devereux; Kjell G. Salvanes
  18. Skinning the Cat: Education Distribution, Changes in the School Premium and Earnings Inequality By Sergio G. Ferreira
  19. The mechanisms of spatial mismatch By Gobillon, Laurent; Selod, Harris; Zenou, Yves
  20. Employers' Search and the Efficiency of Matching By Michele Pellizzari
  21. Power-Biased Technological Change and the Rise in Earnings Inequality By Frederick Guy; Peter Skottz
  22. Why are Married Men Working So Much? By John Knowles
  23. The Long Run Bias Against Manual Workers in British Manufacturing 1920 – 1995 By Martin Hoskins

  1. By: Ciccone, Antonio; Papaioannou, Elias
    Abstract: Do high levels of human capital foster economic growth by facilitating technology adoption? If so, countries with more human capital should have adopted more rapidly the skilled-labour augmenting technologies becoming available since the 1970's. High human capital levels should therefore have translated into fast growth in more compared to less human-capital-intensive industries in the 1980's. Theories of international specialization point to human capital accumulation as another important determinant of growth in human-capital-intensive industries. Using data for a large sample of countries, we find significant positive effects of human capital levels and human capital accumulation on output and employment growth in human-capital-intensive industries.
    Keywords: growth; human Capital; structure of production
    JEL: E13 F11 O11
    Date: 2005–11
  2. By: Guiso, Luigi; Schivardi, Fabiano
    Abstract: Is entrepreneurial talent entirely innate or do people learn to become entrepreneurs? We extend Lucas's (1978) model of entrepreneurship to allow for the possibility that entrepreneurial talents may be acquired by watching other entrepreneurs in action. This model implies that areas with a greater number of firms have higher average firm productivity. We confirm this prediction using Italian firm level data. We show that the endogenous accumulation of entrepreneurial talents is a more convincing explanation for clusters of firms than heterogeneous entry costs. The evidence supports the role of learning even after controlling for other potential sources of local externalities. We also find that other specific implications of the learning mechanism are confirmed by the data.
    Keywords: agglomeration economies; clustering; entrepreneurship; learning
    JEL: D24 D62 J23
    Date: 2005–10
  3. By: Haskel, Jonathan; Hawkes, Denise; Pereira, Sonia
    Abstract: Using two matched plant level skills and productivity datasets for UK manufacturing we document that (i) more productive firms hire more skilled workers: in 2000, plants at the top decile of the TFP distribution (controlling for their four-digit industry) hired workers with, on average, around 1/3rd of a year of additional schooling compared to firms in the bottom decile and (ii) in an accounting sense the skills gap between the firms in the top and bottom deciles of the TFP distribution accounts for 3 to 10% of the TFP gap depending on the specification used.
    Keywords: productivity; skills
    JEL: D24 J24 L6
    Date: 2005–11
  4. By: Martin Hoskins
    Abstract: This paper presents quantitative estimates of the effects of technological change in industries and services on skill composition in the United Kingdom for four skill groups, for men and women separately for the period 1971 – 1991. The paper separates the effects of relative wage change, biased technological change and changes in sectoral composition and estimates the effect of biased technological change on relative pay.
    Keywords: Skill change; United Kingdom; technological change; relative pay
    JEL: J40 O52
    Date: 2005–11
  5. By: Daniele Checchi (University of Milan and IZA Bonn); Vitorocco Peragine (University of Bari)
    Abstract: In this paper we provide a new methodology to measure opportunity inequality and to decompose overall inequality in an "ethically offensive" and an "ethically acceptable" part. Moreover, we provide some empirical applications of these new evaluation tools: in the first exercise, we compare the income distributions of South and North of Italy on the basis of a measure of opportunity inequality. Then, we repeat the exercise using the cognitive abilities in a sample of 15-year old students. In both circumstances we find that the less developed regions in the South are characterized by greater incidence of inequality of opportunity.
    Keywords: equality of opportunity, justice, education
    JEL: D63
    Date: 2005–12
  6. By: Jacobs, Bas; van der Ploeg, Frederick
    Abstract: Although there are exceptions, most European universities and institutions of higher education find it difficult to compete with the best universities in the Anglo-Saxon world. Despite the Bologna agreement and the ambitions of the Lisbon agenda, European universities are in need of fundamental reforms. We look at structural reforms of higher education and propose more effective use of public subsidies, more efficient modes of financing institutions of higher education, more diversity, competition and transparency, and larger private contributions through income-contingent student loans. In the process we discuss the nature of an institution of higher education, grade inflation, fair competition, private and social returns to education, income-contingent loans, student poverty and transparency. We sum up with seven recommendations for reform of higher education.
    Keywords: central planning; education subsidies; equity; grade inflation; higher education; input funding; monopoly; output funding; peer review; policy reform; selection; student loans; transparency; tuition fees; variety
    JEL: H2 H4 I2
    Date: 2005–11
  7. By: Dupuy,Arnaud (ROA wp)
    Abstract: 1 Introduction1.1 BackgroundThe Research Centre for Education and the Labour Market generates everytwo years medium-term forecast of the labour market prospects of typesof education and occupations. The first forecast were generated in 1989,after a pilot in 1987, under a contract from the Ministry of Education andScience. The project intended in first instance to cover the developmentof an information system of use especially for providing educational andvocational guidance to apprentices and students in secondary and highereducation. Gained experience has shown that the information provided byROA’s forecast was also of primary interest for other labour market agents,namely policy makers and employers.The labour market information provided by ROA’s forecast are used variousinformation products at the national level, for instance by the NationalCareer Guidance Information Centre (LDC) and the Centre for Informationon Higher Education for Consumer and Expert (CHOICE). The first forecastwere used to supplement the labour market module I see!. This wasa computerised information system, established by LDC, bringing togetherinformation from many sources which might be relevant for the choice of a careeror course of study. Vocational guidance by teachers and others involvedin assisting students to make these choices could call up this information viatheir personal computer and obtain, along with other information on studyand vocational choices, an idea of the labour market consequences of thechoices which were available. The LDC brought out another informationsystem, ‘Traject’, which also makes use of labour market information providedby ROA. ROA’s forecast have also been one of the foundations of theLDC’s series of brochures for study and vocational guidance, and both the‘Keuzegids Hoger Onderwijs’ and the ‘Studiekeuze-Informatiedatabase’ publishedby CHOICE. In addition in their own database, the Central for Workand Income (CWI) used the current data and the forecast of the informationsystem to formulate policies on employment in general and vocationalguidance for the unemployed in particular.
    Keywords: education, training and the labour market;
    Date: 2005
  8. By: Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
    Abstract: This paper suggests that the spillover of knowledge may not occur automatically as has typically been assumed in models of endogenous growth. Rather, a mechanism is required that serves as a conduit for the spillover and commercialization of knowledge from the source creating it to the firm actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data for 18 countries, empirical evidence is found that in addition to measures of R&D and human capital, entrepreneurial activity also serves to promote economic growth.
    Keywords: Entrepreneurship, Growth
    Date: 2005–11
  9. By: Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
    Abstract: Contemporary theories of entrepreneurship generally focus on the decision-making context of the individual. The recognition of opportunities and the decision to commercialize them is the focal concern. While the prevalent view in the entrepreneurship literature is that opportunities are exogenous, the most prevalent theory of innovation in the economics literature suggests that opportunities are endogenous. This paper bridges the gap between the entrepreneurship and economic literature on opportunity by developing a knowledge spillover theory of entrepreneurship. The basic argument is that knowledge created endogenously via R&D results in knowledge spillovers. Such spillovers give rise to opportunities to be identified and exploited by entrepreneurs. Our results show that there is a strong relationship between knowledge spillovers and new venture creation.
    Keywords: entrepreneurship; knowledge; management science; opportunity
    JEL: J24 M13 O3 R1
    Date: 2005–11
  10. By: Audretsch, David B; Lehmann, Erik E
    Abstract: The resource theory of the firm implies that knowledge is a key resource bestowing a competitive advantage for entrepreneurial firms. However, it remains rather unclear up to now, how new ventures and small business can access knowledge resources. The purpose of this paper is to suggest two strategies in particular that facilitate entrepreneurial access to and absorption of external knowledge spillovers: the attraction of managers and directors with an academic background. Based on data on board composition of 295 high technology firms, the results clearly demonstrate the strong link between geographical proximity to research intense universities and board composition.
    Keywords: board composition; corporate governance; entrepreneurship; university spillover
    Date: 2005–11
  11. By: Lorentowicz, Andzelika; Marin, Dalia; Raubold, Alexander
    Abstract: Feenstra and Hanson (1997) have argued in the context of the North American Free Trade Agreement that US outsourcing to Mexico leads to an increase in the skill premium in both the US and Mexico. In this paper we show on the example of Austria and Poland that with the new international division of labour emerging in Europe Austria, the high income country, is specializing in the low skill intensive part of the value chain and Poland, the low income country, is specializing in the high skill part. As a result, skilled workers in Austria are losing from outsourcing, while gaining in Poland. In Austria, relative wages for human capital declined by 2 percent during 1995-2002 and increased by 41 percent during 1994-2002 in Poland. In both countries outsourcing contributes roughly 35 percent to these changes in the relative wages for skilled worker. Furthermore, we show that Austria's R&D policy has contributed to an increase in the skill premium there.
    Keywords: foreign direct investment; transition economics; wage inequality
    JEL: F21 F23 J31 P45
    Date: 2005–11
  12. By: Hartmut Egger (University of Zurich, CESifo and GEP Nottingham); Peter Egger (Ifo Institute, University of Munich, CESifo and GEP Nottingham); Josef Falkinger (University of Zurich, CESifo and IZA Bonn); Volker Grossmann (University of Fribourg, CESifo and IZA Bonn)
    Abstract: This paper examines the impact of capital market integration (CMI) on higher education and economic growth. We take into account that participation in higher education is noncompulsory and depends on individual choice. Integration increases (decreases) the incentives to participate in higher education in capital-importing (-exporting) economies, all other things equal. Increased participation in higher education enhances productivity progress and is accompanied by rising wage inequality. From a national policy point of view, education expenditure should increase after integration of similar economies. Using foreign direct investment (FDI) as a measure for capital flows, we present empirical evidence which largely confirms our main hypothesis: An increase in net capital inflows in response to CMI raises participation in higher education and thereby fosters economic growth. We apply a structural estimation approach to fully track the endogenous mechanisms of the model.
    Keywords: capital mobility, capital-skill complementarity, educational choice, education policy, economic growth, wage income inequality
    JEL: F20 H52 J24 O10
    Date: 2005–11
  13. By: Sieben,Inge (ROA rm)
    Abstract: This study advances on previous research on training and turnover in two ways. First, insights from the human capital perspective are contrasted with insights from the commitment perspective. Second, several aspects of training are simultaneously studied in one model: training incidence, duration, specificity, location, costs, time, and objectives. Using survey data from the ‘Higher Education and Graduate Employment in Europe’ project, I find that, in line with the human capital perspective, specific training decreases the probability to search for a new job. Moreover, it seems that training not provided by the employer and not followed during working hours induces more job search behaviour, at least for men. This could be interpreted as a negative version of the commitment perspective. After controlling for training specificity, training location, costs, and time no longer influence job search behaviour, however.
    Keywords: education, training and the labour market;
    Date: 2005
  14. By: Grip,Andries,de; Bosma,Hans; Willems,Dick; Boxtel,Martin,van (ROA rm)
    Abstract: We use longitudinal test data on various aspects of persons’ cognitive abilities to analyze whether overeducated workers are more vulnerable to cognitive decline, and undereducated workers are less vulnerable. We find that the job-worker mismatch induces cognitive decline with respect to immediate and delayed recall abilities, cognitive flexibility and verbal fluency. Our findings indicate that, to some extent, it is the adjustment of the ability level of the overeducated and undereducated workers that adjusts initial mismatch. This adds to the relevance of preventing overeducation, and shows that being employed above one’s level of education contributes to workers’ cognitive resilience.
    Keywords: education, training and the labour market;
    Date: 2005
  15. By: Sascha O. Becker
    Abstract: Transition patterns from school to work differ considerably across OECD countries. Some countries exhibit high youth unemployment rates, which can be considered an indicator of the difficulty facing young people trying to integrate into the labor market. At the same time, education is a time-consuming process, and enrolment and dropout decisions depend on expected duration of studies, as well as on job prospects with and without completed degrees. One way to model entry into the labor market is by means of job search models, where the job arrival hazard is a key parameter in capturing the ease or difficulty in finding a job. Standard models of job search and education assume that skills can be upgraded instantaneously (and mostly in the form of on-the-job training) at a fixed cost. This paper models education as a time-consuming process, a concept which we call time-to-educate, during which an individual faces the trade-off between continuing education and taking up a job.
    Keywords: job search, education, enrollment, dropouts
    JEL: E24 J31 J41 J64
    Date: 2005
  16. By: Robert A. J. Dur; Amihai Glazer
    Abstract: We explain why means-tested college tuition and means-tested government grants to college students can be efficient. The critical idea is that attending college is both an investment good and a consumption good. If education has a consumption benefit and tuition is uniform, the marginal rich student is less smart than some poor people who choose not to attend college, thus reducing the social returns to education and increasing the college’s cost of education. We find that competition among profit-maximizing colleges results in means-tested tuition. In addition, to maximize the social returns to education government should means-test grants. We thus provide a rationale for means-tested tuition and grants which relies neither on capital market imperfections nor on redistributive objectives.
    Keywords: tuition policy, education subsidies, self-selection
    JEL: H52 I20
    Date: 2005
  17. By: Sandra E. Black (UCLA, NBER and IZA Bonn); Paul J. Devereux (University College Dublin and IZA Bonn); Kjell G. Salvanes (Norwegian School of Economics, Statistics Norway, Center for the Economics of Education (CEP) and IZA Bonn)
    Abstract: Lower birth weight babies have worse outcomes, both short-run in terms of one-year mortality rates and longer run in terms of educational attainment and earnings. However, recent research has called into question whether birth weight itself is important or whether it simply reflects other hard-to-measure characteristics. By applying within twin techniques using a unique dataset from Norway, we examine both short-run and long-run outcomes for the same cohorts. We find that birth weight does matter; very small short-run fixed effect estimates can be misleading because longer-run effects on outcomes such as height, IQ, earnings, and education are significant and similar in magnitude to OLS estimates. Our estimates suggest that eliminating birth weight differences between socio-economic groups would have sizeable effects on the later outcomes of children from poorer families.
    Keywords: birth weight, twins, education, IQ, earnings
    JEL: J1 I1
    Date: 2005–11
  18. By: Sergio G. Ferreira (IBMEC Business School - Rio de Janeiro)
    Abstract: This paper applies the procedure in JUHN ET ALL (1993) to decompose changes in income inequality over time in terms of education-related causal factors: school premiums, educational distribution and residual changes. The main conclusion is that reductions in the school premiums have systematically had a negative impact on income inequality during the last twenty years. At the same time, education has become more unequally distributed for individuals below the median labor income level and more equally distributed for those above it. The combination of the two forces has reduced income dispersion for the top half of earners, and slightly increased it among the bottom half. This difference in trends of educational distribution lies behind an apparently stable profile of income inequality (considering the whole earnings distribution).
    Date: 2005–11–30
  19. By: Gobillon, Laurent; Selod, Harris; Zenou, Yves
    Abstract: The Spatial Mismatch Hypothesis (SMH) argues that low-skilled minorities residing in U.S. inner cities experience poor labour-market outcomes because they are disconnected from suburban job opportunities. This assumption gave rise to an abundant empirical literature, which confirmed this hypothesis. Surprisingly, however, it is only recently that theoretical models have emerged, which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested. In this survey, we present relevant facts, review the theoretical models of spatial mismatch, confront their predictions with available empirical results, and indicate which mechanisms deserve further empirical tests.
    Keywords: discrimination; ghettos; segregation; urban unemployment
    JEL: J15 J41 R14
    Date: 2005–11
  20. By: Michele Pellizzari (IGIER-Bocconi University, fRDB and IZA Bonn)
    Abstract: Unskilled workers in low productivity jobs typically experience higher labour turnover. This paper shows how this empirical finding is related to variation in the efficiency of the matching process across occupations. A simple theoretical model of employers' search shows that firms find it optimal to invest relatively little in advertisement and screening when recruiting for low productivity jobs. This generates more separations and higher turnover at the bottom than at the top of the jobs’ distribution. The analysis of a unique sample of British hirings, containing detailed information about employers' recruitment practices, shows that more intensive recruitment leads to matches of better quality that pay higher wages, last longer and make employers more satisfied with the person taken on.
    Keywords: labour turnover, matching, recruitment, hiring
    JEL: J63 J64 M51
    Date: 2005–11
  21. By: Frederick Guy (School of Management and Organizational Psychology, Birkbeck College); Peter Skottz (Department of Economics, University of Massachusetts)
    Abstract: New information and communication technologies, we argue, have been ‘power- biased’: they have allowed firms to monitor low-skill workers more closely, thus reducing the power of these workers. An efficiency wage model shows that ‘power-biased technical change’ in this sense may generate rising wage inequality accompanied by an increase in both the effort and unemployment of low-skill workers. The skill-biased technological change hypothesis, on the other hand, others no explanation for the ob- served increase in effort.
    Keywords: power-biased technical change, skill bias, efficiency wages, wage inequality, work intensity.
    JEL: J31 O33
    Date: 2005–11
  22. By: John Knowles (Department of Economics, University of Pennsylvania)
    Abstract: We document a negative trend in the leisure of men married to women aged 25-45, relative to that of their wives, and a positive trend in relative housework. Taken together, these trends rule out a popular class of labor supply models in which unitary households maximize the sum of the spouse’s utility. We develop a simple bargaining model of marriage, divorce and allocations of leisure-time and housework. According to the model, a rise in women’s relative wage will reduce husband’s leisure and marriage rates when the quality of single life is relatively high for women. Calibration to US data shows the trend in relative wages explains most of the trend in relative leisure and about a third of the trend in housework, while the simultaneous trend in home-durables prices explains the balance of the housework trend.
    Keywords: General Aggregative Models, Neoclassical, Marriage, Marital Dissolution, Family Structure, Economics of Gender, Non-labor Discrimination, Time Allocation, Work Behavior, Employment Determination and Creation, Human Capital, Time Allocation and Labor Supply
    JEL: E13 J12 J16 J20 J22
    Date: 2005–11–01
  23. By: Martin Hoskins
    Abstract: This paper presents quantitative estimates of the effects of technological change on the composition of manual and non-manual employment in manufacturing in the United Kingdom for the period 1921 – 1995. The paper separates the effects of relative wage change, biased technological change and changes in sectoral composition and calculates the upward pressure on relative pay exerted by biased technological change.
    Keywords: Skill change; United Kingdom; technological change; sectoral composition
    JEL: J40 O52
    Date: 2005–11

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