nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒01‒24
twenty-two papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. Growth in euro area labour quality By Guido Schwerdt; Jarkko Turunen
  2. On Human Capital Formation with Exit Options: Comment and New Results By Panu Poutvaara
  3. A Human Capital Model of the Effects of Abilities and Family Background on Optimal Schooling Levels By Tracy L. Regan; Galen Burghardt; Ronald L. Oaxaca
  4. Does Educational Tracking Affect Performance and Inequality? Differences-in-Differences Evidence across Countries By Eric A. Hanushek; Ludger Woessmann
  5. Growth and Entrepreneurship: An Empirical Assessment By Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
  6. The Low Employment Rate Conundrum. Can More Human Capital Help ? By Vincent, VANDENBERGHE
  7. Trends in the pattern of lifelong learning in Sweden: towards a decentralized economy By Ericson, Thomas
  8. Childhood Family Structure and Schooling Outcomes: Evidence for Germany By Francesconi, Marco; Jenkins, Stephen P; Siedler, Thomas
  9. Education Policy and Equality of Opportunity By Gabriela Schütz; Heinrich W. Ursprung; Ludger Woessmann
  10. Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation By Christian Holzner; Andrey Launov
  11. Evaluating the Impact of Performance-related Pay for Teachers in England. By Adele Atkinson; Simon Burgess; Bronwyn Croxson; Paul Gregg
  12. Who wins and who loses from school accountability? The distribution of educational gain in English secondary schools By Simon Burgess; Carol Propper; Helen Slater; Deborah Wilson
  13. Is Job Enrichment Really Enriching? By Robert D. Mohr; Cindy Zoghi
  14. The Dynamics of School Attainment of England’s Ethnic Minorities By Deborah Wilson; Simon Burgess; Adam Briggs
  15. Factors influencing income inequality across urban Argentina (1998-2003) By María Emma Santos
  16. Parental Transfers, Student Achievement, and the Labor Supply of College Students By Kalenkoski, Charlene Marie; Sabrina Wulff Pabilonia
  17. What Does it Take to Achieve Equality of Opportunity in Education ? An Empirical Investigation Based on Brazilian Data By F.D., WALTENBERG; V. , VANDENBERGHE
  18. To my Wife, with Love! Does Within-household Specialisation Explain Husbands' Better Job-education-match? By Aniela Wirz
  19. Reassessing the Gender Wage Gap: Does Labour Force Attachment Really Matter? Evidence from Matched Labour Force and Biographical Surveys in Madagascar By Christophe Nordman; François Roubaud
  20. The Transition from Welfare to Work By Robert J. Lemke; Robert J. Witt; Ann Dryden Witte
  21. Inequality and Heterogeneous Returns to Education in Mexico (1992-2002) By Aashish Mehta; Hector J. Villarreal
  22. Do Home Computers Improve Educational Outcomes? Evidence from Matched Current Population Surveys and the National Longitudinal Survey of Youth 1997 By Daniel O. Beltran; Kuntal K. Das; Robert W. Fairlie

  1. By: Guido Schwerdt (European University Institute, Department of Economics, Villa San Paolo, Via della Piazzuola 43, 50133 Florence, Italy); Jarkko Turunen (European Central Bank, DG-Economics, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.)
    Abstract: Composition of the euro area workforce evolves over time and in response to changing labour market conditions. We construct an estimate of growth in euro area labour quality over the period 1983-2004 and show that labour quality has grown on average by 0.6% year-on-year over this time period. Labour quality growth was significantly higher in the early 1990s than in the 1980s. This strong increase was driven by an increase in the share of those with tertiary education and workers in prime age. Growth in labour quality moderated again towards the end of the 1990’s, possibly reflecting the impact of robust employment growth resulting in the entry of workers with lower human capital. Labour quality growth has on average accounted for nearly one third of euro area labour productivity growth. The results point to a significant decline in the contribution of total factor productivity to euro area growth.
    Keywords: Human capital, labour quality, total factor productivity, growth accounting.
    JEL: E24 J24 O47
    Date: 2006–01
  2. By: Panu Poutvaara (University of Helsinki and IZA Bonn)
    Abstract: Katz and Rapoport (2005) conclude that with linear production technology and the possibility of unilateral migration, region-specific shocks may increase the average level of education. Previously, Poutvaara (2000) derived a corresponding result with Cobb-Douglas technology and migration which may go in both directions. This paper shows that the exit option may reduce human capital formation with a quadratic production technology.
    Keywords: human capital formation, migration, economic volatility
    JEL: F22 J24 I21
    Date: 2005–12
  3. By: Tracy L. Regan (University of Miami); Galen Burghardt (Calyon Financial); Ronald L. Oaxaca (University of Arizona and IZA Bonn)
    Abstract: This paper develops a theoretical model of optimal schooling levels where ability and family background are the central explanatory variables. We derive schooling demand and supply functions based on individual wealth maximization. Using NLSY79 data we stratify our sample into one-year "FTE" work experience cohorts for 1985-1989. Mincer's (1974) "overtaking" cohort (the years of work experience at which individuals' observed earnings approximately equal what they would have been based on schooling and ability alone) corresponds to 13 FTE years of work experience yielding on average a rate of return of 9.6 percent and an average (optimal) 11.4 years of schooling.
    Keywords: human capital, ability, family background, schooling, earnings
    JEL: J24 J31 J22
    Date: 2006–01
  4. By: Eric A. Hanushek (Hoover Institution, Stanford University, CESifo and NBER); Ludger Woessmann (Ifo Institute, University of Munich, CESifo and IZA Bonn)
    Abstract: Even though some countries track students into differing-ability schools by age 10, others keep their entire secondary-school system comprehensive. To estimate the effects of such institutional differences in the face of country heterogeneity, we employ an international differences-in-differences approach. We identify tracking effects by comparing differences in outcome between primary and secondary school across tracked and non-tracked systems. Six international student assessments provide eight pairs of achievement contrasts for between 18 and 26 cross-country comparisons. The results suggest that early tracking increases educational inequality. While less clear, there is also a tendency for early tracking to reduce mean performance. Therefore, there does not appear to be any equity-efficiency trade-off.
    Keywords: tracking, streaming, ability grouping, selectivity, comprehensive school system, educational performance, inequality, international student achievement test, TIMSS, PISA, PIRLS
    JEL: I2
    Date: 2005–12
  5. By: Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
    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
    JEL: M13 O40 R11
    Date: 2005–12
  6. By: Vincent, VANDENBERGHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: Many EU countries are confronted with low employment rates, particularly among elderly workers. At the same time, levels of human capital are on the rise. Should this lift the age of retirement and lead to higher lifetime employment rates ? In order to explore these issues, we develop a simple model with endogenous retirement. It tells us that the impact of education on retirement is ambiguous. Higher wages encourage educated workers to postpone retirement (foregone effect). But higher wages allow faster wealth accumulation (income effect) which could favour early retirement. There is also that better educated individuals tend to be older when tehy enter the labour market. The general prediction is thus that, over their lifecycle, more educated individuals should not necessarily spend more years in employment. The econometric analysis of representative samples of 50+ males and females across various EU countries shows that educated individuals systematically retire later, suggesting that the foregone earnings effect dominates the income effect. Yet, the same data reveal that more educated individuals do not have higher lifetime employment rates. The benefit in terms of later retirement is not sufficient to offset later labour market entrance.
    Keywords: Endogenous retirement; Human Capital; employment rate
    JEL: J24 J26
    Date: 2005–11–15
  7. By: Ericson, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This essay offers an overview and discussion about the conditions for Swedish workers to obtain lifelong learning. It studies how the Swedish schooling system and the institutions for adult training have influenced workers’ abilities to upgrade their skills. A general conclusion is that a previous centralistic structure of education,labour market programmes and wage negotiations has transformed to a more decentralised economy, where individual incentives and abilities to make efficient choices during the life cycle are becoming increasingly important. <p>
    Keywords: Swedish Model; Lifelong learning; Education; On-the-job training
    JEL: I21 J24 J50
    Date: 2006–01–03
  8. By: Francesconi, Marco; Jenkins, Stephen P; Siedler, Thomas
    Abstract: We analyse the impact on schooling outcomes of growing up in a family headed by a single mother. Growing up in a non-intact family in Germany is associated with worse outcomes in models that do not control for possible correlations between common unobserved determinants of family structure and educational performance. But once endogeneity is accounted for, whether by using sibling-difference estimators or two types of instrumental variable estimator, the evidence that family structure affects schooling outcomes is much less conclusive. Although almost all the point estimates indicate that non-intactness has an adverse effect on schooling outcomes, confidence intervals are large and span zero.
    Keywords: childhood family structure; educational success; instrumental variables; lone parenthood; sibling differences; treatment effects
    JEL: C23 D13 I21 J12 J13
    Date: 2005–12
  9. By: Gabriela Schütz (Ifo Institute, University of Munich); Heinrich W. Ursprung (University of Konstanz and CESifo); Ludger Woessmann (Ifo Institute, University of Munich, CESifo and IZA Bonn)
    Abstract: We provide a measure of equality of educational opportunity in 54 countries, estimated as the effect of family background on student performance in two international TIMSS tests. We then show how organizational features of the education system affect equality of educational opportunity. Our model predicts that late tracking and a long pre-school cycle are beneficial for equality, while pre-school enrollment is detrimental at low levels of enrollment and beneficial at higher levels. Using cross-country variations in education policies and their interaction with family background at the student level, we provide empirical evidence supportive of these predictions.
    Keywords: equality of opportunity, educational production, family background, student performance, tracking, pre-school, efficiency-equity tradeoff
    JEL: I21 J62 H52
    Date: 2005–12
  10. By: Christian Holzner (ifo Institute for Economic Research); Andrey Launov (University of Würzburg and IZA Bonn)
    Abstract: We introduce different skill groups and production functions into the Burdett-Mortensen equilibrium search model. Supermodularity in the production process leads to a positive intrafirm wage correlation between skill groups. Theory implies that increasing returns to scale can lead to a unimodal earnings density with a decreasing right tail even in the absence of productivity dispersion. Our empirical results indicate economy-wide increasing returns to scale. We use the structural estimates of the production parameters to investigate whether private returns to education equal social returns. Our estimates suggest a positive welfare effect from increasing the share of medium-skilled agents in the workforce.
    Keywords: search, wage correlation, social returns to education
    JEL: J21 J23 J64
    Date: 2005–12
  11. By: Adele Atkinson; Simon Burgess; Bronwyn Croxson; Paul Gregg
    Abstract: This paper evaluates the impact of a performance-related pay scheme for teachers in England. Using teacher level data, matched with test scores and value-added, we test whether the introduction of a payment scheme based on pupil attainment increased teacher effort. Our evaluation design controls for pupil effects, school effects and teacher effects, and adopts a difference-in-difference methodology. We find that the scheme did improve test scores and value added, on average by about half a grade per pupil. We also find heterogeneity across subjects, with maths teachers showing no improvement.
    Keywords: Incentives, teachers pay, education reform, pupil attainment
    JEL: J33 J45 D23 I28
    Date: 2004–12
  12. By: Simon Burgess; Carol Propper; Helen Slater; Deborah Wilson
    Abstract: In 1988 the UK government introduced greater accountability into the English state school sector. But the information that schools are required to make public on their pupil achievement is only partial. The paper examines whether accountability measures based on a partial summary of student achievement influence the distribution of student achievement. Since school ratings only incorporate test results via pass rates, schools have incentives to improve the performance of students who are on the margin of meeting these standards, to the detriment of very low achieving or high achieving pupils. Using pupil level data for a cohort of all students in secondary public sector schools in England, we find that this policy reduces the educational gains and exam performance in high stakes exams of very low ability students.
    Keywords: school accountability, high stakes exams, educational value added
    JEL: I20 I28 D23
    Date: 2005–07
  13. By: Robert D. Mohr (University of New Hampshire); Cindy Zoghi (U.S. Bureau of Labor Statistics)
    Abstract: This study uses a survey of Canadian workers with rich, matched data on job characteristics to examine whether “enriched” job design, with features like quality circles, feedback, suggestion programs, and task teams, affects job satisfaction. We identify two competing hypotheses on the relationship between enriched jobs and job satisfaction. The “motivation hypothesis,” implies that enrichment will generally increase satisfaction and the “intensification hypothesis,” implies that enrichment may decrease satisfaction by increasing the intensity and scope of work. Our results show that several forms of enrichment, specifically suggestion programs, information sharing, task teams, quality circles and training, raise satisfaction. Therefore we argue that the data support the motivation hypothesis. Partitioning the data by education level or union membership further supports this conclusion, while a direct test of the intensification hypothesis does not support the competing hypothesis.
    Keywords: Job Satisfaction; Job Enrichment; Human Resource Practices
    JEL: J28 M54 J24
    Date: 2006–01
  14. By: Deborah Wilson; Simon Burgess; Adam Briggs
    Abstract: We exploit a universe dataset of state school students in England with linked test score records to document the evolution of attainment through school for different ethnic groups. The analysis yields a number of striking findings. First, we show that, controlling for personal characteristics, all minority groups make greater progress than white students over secondary schooling. Second, much of this improvement occurs in the high-stakes exams at the end of compulsory schooling. Third, we show that for most ethnic groups, this gain is pervasive, happening in almost all schools in which these students are found. We address some of the usual factors invoked to explain attainment gaps: poverty, language, school quality, and teacher influence. We conclude that our findings are more consistent with the importance of factors like aspirations and attitudes.
    Keywords: ethnic test score gap, school attainment, education
    JEL: I20 J15
    Date: 2005–10
  15. By: María Emma Santos (Vanderbilt University, Nashville)
    Abstract: This paper tries to disentangle the most relevant determinants of spatial inequality in the urban areas of Argentina. The analysis is restricted to the period 1998-2003. The study is performed with a Panel Data approach using a random effects model. Results suggest that human capital, measured by rates of education completion, is an important contributor to spatial inequality. High rates of primary education appear to reduce inequality while higher rates of secondary education appear to increase it. Labor market characteristics also play a role: urban areas with higher unemployment rates, higher returns to education and a lower percentage of people employed in the secondary sector tend to have higher levels of inequality. Also, dependency and the percentage of people with unsatisfied basic needs have increasing-inequality effects. Finally, there seems to be a relationship between inequality and the level of development, though not with a clear inverted-U pattern as hypothesized by Kuznets. Results are robust to different measures of inequality and different income specifications.
    JEL: D31 I21
    Date: 2005–11–08
  16. By: Kalenkoski, Charlene Marie (Ohio University); Sabrina Wulff Pabilonia (U.S. Bureau of Labor Statistics)
    Abstract: Using nationally representative data from the NLSY97, financial motivations for and the effects of employment on U.S. college students’ academic performance are examined. While it is expected that fewer financial resources and a higher cost of college cause greater student employment, the data indicate that the number of hours a student works per week is unaffected by either the level of parental transfers or the cost of schooling. Contrary to existing evidence that a greater number of hours worked leads to poorer academic performance, the number of hours worked per week does not negatively affect a student’s GPA and may actually improve it.
    Keywords: schooling, educational finance, grades, college students
    JEL: D1 I2 J22
    Date: 2005–12
    Abstract: Roemer s’ 1998 seminal work on equality of opportunity has contributed to the emergence of a theory of justice that is modern, conceptually clear and easy to mobilize in policy design. In this paper, we apply Roemer’s theory to education policy. We first analyze the reallocations of educational expenditure required to equalize opportunities (taken to be test scores close to the end of compulsory education). Using Brazilian data, we find that implementing an equal-opportunity policy across pupils of different socio-economic background, by using per-pupil spending as the instrucment, and ensuring that nobody receives less that 1/3 of the current national average, requires multiplying by 8.6 the current level of spending on the lowest achieving pupils. This result is driven by the extremely low elasticity of scores to per-pupil spending. As such, it implies large reallocations that are probably politically unacceptable. By exploiting our knowledge of the education production function, we then identify ways of reducing financial reallocations needed to achieve equality of opportunity. We show that the simultaneous redistribution of monetary and non-moneary inputs, like peer group quality (i.e. desegregation) and school effectiveness (i.e. equalizing access to the best-run schools), considerably reduces - by almost 50% - the magnitude of financial redistribution needed. Implementing an EOp policy would not come at any particular cost (or benefit) in terms of efficiency
    Keywords: Equality of Opportunity; Education; Formula Funding
    JEL: I28 H52
    Date: 2005–12–01
  18. By: Aniela Wirz (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Married male workers are found to have a lower incidence of overeducation. A theoretical explanation for this phenomenon is lacking. We test in our study whether the traditional specialisation of spouses’ time between home and market production tends to improve a husband’s jobeducation- match (JEM). We test this hypothesis first by drawing on the method used in the marriage wage premia literature based mainly on the model of Becker (1985). In addition, we perform a new test following the theory of François (1998), which requires less restrictive assumptions. Overall, our results show that within-household specialisation (WHS) explains a substantial part of the superior JEM of husbands, regardless of whether a wife’s labour market participation (experience) or both spouses housework hours are used to measure specialisation. The results and in particular the independent and significant impact of women’s housework hours on their husbands’ JEM, however, speak clearly in favour of François’ theory and against the explanation of Becker. Testing for an endogeneity bias due to a possible sorting process of more able husbands with “traditional” spouses or a measurement error of the JEM does not alter these conclusions.
    Keywords: Overeducation; Household models, Human capital, Labour productivity
    JEL: I21 J16 J24
    Date: 2004–11
  19. By: Christophe Nordman (DIAL, IRD-Paris); François Roubaud (DIAL, IRD-Paris)
    Abstract: Assessing gender inequalities has become one of the key issues of the new international poverty reduction strategies implemented in most LDCs in the past few years. It has been argued that differences in labour force attachment across gender are important to explain the extent of the gender earnings gap. However, measures of women's professional experience are particularly prone to errors given discontinuity in labour market participation. For instance, the classical Mincerian approach, where potential experience is used as a proxy for actual experience due to lack of appropriate data, has its limits in estimating the true returns to human capital. Such biases in the estimates cannot be ignored since the returns to human capital are used in the standard decomposition techniques to measure the extent of gender-based wage discrimination. By matching two original surveys conducted in Madagascar in 1998 - a labour force survey and a biographical survey - we built a unique dataset that enabled us to combine the original information gathered from each of them, particularly the earnings from current employment and the entire professional trajectories. Our results lead to an upward reappraisal of returns to experience, as potential experience always exceeds actual experience, for both males and females. In addition, controlling for further qualitative aspects of labour force attachment, we obtain a significant increase in the portion of the gender gap explained by observable characteristics, while the differences in average actual experience across sexes lead to markedly different estimates of the fraction of the gender earnings gap explained by experience.
    Keywords: gender wage gap, returns to human capital, labour force participation, biographical data, Madagascar.
    JEL: J24 J31 O12
    Date: 2005
  20. By: Robert J. Lemke (Lake Forest College); Robert J. Witt (University of Surrey); Ann Dryden Witte (Wellesley College and NBER)
    Abstract: We consider the effects the child care market, child care vouchers, early childhood education programs, and welfare reforms have on welfare recipients in their transition from welfare to work. Specifically, we are interested in determining which factors encourage single mothers to move directly from welfare to work and which factors encourage the pursuit of additional schooling or job retraining before entering the labor market. Using Massachusetts data from July 1996 through August 1997, we find that the availability, quality, and cost of formal child care are all positively related to transiting directly from welfare to work. We also find that single mothers with older children are more likely to pursue a job and forego additional schooling, while single mothers with infants are more likely to advance their education before seeking employment.
    Keywords: Welfare Reform, Child Care, Vouchers, Time Limits, Labor Supply
    JEL: I38 H40 J22 I20
    Date: 2004–08
  21. By: Aashish Mehta (Asian Development Bank); Hector J. Villarreal (ITESM Campus Monterrey, EGAP / Mexico)
    Abstract: Within the attempts to understand Mexican economic inequality, returns to education have received a great deal of attention. The driving question has been: why are Mexican wages so unequal? This paper argues that not only the distribution of human capital matters, but also sociodemographic variables, which have their own dynamics and complex interactions with the former. A three-equation maximum likelihood specification in which employment, hours worked and log-wages, as well as their joint variance matrix is proposed, generalizing the Mincerian specification. The resulting is a complex story, where income profiles depend upon particular characteristics.
    JEL: O12 J31 D31
    Date: 2005–11–18
  22. By: Daniel O. Beltran (University of California, Santa Cruz); Kuntal K. Das (University of California, Santa Cruz); Robert W. Fairlie (University of California, Santa Cruz, National Poverty Center and IZA Bonn)
    Abstract: Nearly twenty million children in the United States do not have computers in their homes. The role of home computers in the educational process, however, has drawn very little attention in the previous literature. We use panel data from the two main U.S. datasets that include recent information on computer ownership among children - the 2000-2003 CPS Computer and Internet Use Supplements (CIUS) matched to the CPS Basic Monthly Files and the National Longitudinal Survey of Youth 1997 - to explore the relationship between computer ownership and high school graduation and other educational outcomes. Teenagers who have access to home computers are 6 to 8 percentage points more likely to graduate from high school than teenagers who do not have home computers after controlling for individual, parental, and family characteristics. We generally find evidence of positive relationships between home computers and educational outcomes using several estimation strategies, including controlling for typically unobservable home environment and extracurricular activities in the NLSY97, fixed effects models, instrumental variables, future computer ownership and "pencil tests". Some of these estimation techniques, however, provide imprecise estimates. Home computers may increase high school graduation by reducing nonproductive activities, such as truancy and crime, among children in addition to making it easier to complete school assignments.
    Keywords: computers, educational outcomes, technology
    JEL: I2
    Date: 2006–01

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