nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒04‒22
twenty papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Human capital as a risky asset and the effect of uncertainty on the decision to invest By Saïd Hanchane; A. Lioui; David Touahri
  2. The return to firm investment in human capital By Rita Almeida; Pedro Carneiro
  3. Why Does Democracy Need Education? By Edward Glaeser; Giacomo Ponzetto; Andrei Shleifer
  4. The impact of training on productivity and wages: evidence from British panel data By Lorraine Dearden; Howard Reed; John Van Reenen
  5. Do Population Control Policies Induce More Human Capital Investment? Twins, Birthweight, and China's 'One Child' Policy By Mark R. Rosenzweig; Junsen Zhang
  6. Skill Shortages, Labor Reallocation, and Growth By Pascal Hetze
  7. Human Capital, Population Growth and Industrial Development in Mexico and Turkey: A Comparative Analysis with Other OECD Countries, 1964-2004 By Guisan, Carmen
  8. The Knowledge Filter and Economic Growth: The Role of Scientist Entrepreneurship By David B. Audretsch; Taylor Aldridge; Alexander Oettl
  9. Optimal Accumulation in an Endogenous Growth Setting with Human Capital By Frédéric Docquier; Oliver Paddison; Pierre Pestieau
  10. Comprehensive Education or Vocational Training for the Unemployed? By Stenberg, Anders
  11. Migrant Remittances, Human Capital Formation and Job Creation Externalities in Colombia By Maurice Kugler
  12. Wages and Human Capital in Exporting Firms in Morocco By Christophe Muller; Christophe Nordman
  13. Racial Identity and Education By Patacchini, Eleonora; Zenou, Yves
  14. Misreported schooling and returns to education: evidence from the UK By Erich Battistin; Barbara Sianesi
  15. Comprehensive versus Selective Schooling in England in Wales: What Do We Know? By Alan Manning; Jörn-Steffen Pischke
  16. Skill Transferability Regret and Mobility By Borghans Lex; Golsteyn Bart
  17. Does Social Capital Improve Labour Productivity in Small and Medium Enterprises? By Fabio Sabatini
  18. Peer Effects in European Primary Schools: Evidence from PIRLS By Andreas Ammermueller; Jörn-Steffen Pischke
  19. Social Capital and Economic Development By Fabio Sabatini
  20. The effect of pre-primary education on primary school performance By Samuel Berlinski; Sebastian Galiani; Paul Gertler

  1. By: Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - []); A. Lioui (Department of Economics - [Bar Llan University] - [] - []); David Touahri (LEST - Laboratoire d'économie et de sociologie du travail - - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II] - [])
    Abstract: In this paper, we analyse the human capital accumulation process over the life cycle of individuals under uncertainty. To do so, we develop a continuous time dynamic programming model which takes into account several sources of uncertainty, concerning the human capital accumulation process and the labour market. We also introduce some macro exogenous variables to take into account intertemporality of decisions. We first determine the structure of human capital investment in a general setting. Then, we specify individual preferences to obtain explicit solutions, and we produce an in-depth study of each source's effect of uncertainty on human capital investment. As a special case of state variable, we explicitely take into account unemployment risk. We show that the global effect of uncertainty is negative, except if a sufficiently high risk premium exists.
    Keywords: Human capital; Life cycle; Risk; Stochastic optimal control
    Date: 2006–04–11
  2. By: Rita Almeida; Pedro Carneiro (Institute for Fiscal Studies and University College, London)
    Abstract: In this paper we estimate the rate of return to firm investments in human capital in the form of formal job training. We use a panel of large firms withun usually detailed information on the duration of training, the direct costs of training, and several firm characteristics such as their output,workforce characteristics and capital stock. Our estimates of the return to training vary substantially across firms. On average it is - 7% for firms not providing training and 24% for those providing training. Formal job training is a good investment for many firms and the economy, possibly yielding higher returns than either investments in physical capitalor investments in schooling. In spite of this, observed amounts of formal training are very small.
    Keywords: On-the-Job Training, Panel Data, Production Function, Rate of Return
    JEL: C23 D24 J31
    Date: 2005–12
  3. By: Edward Glaeser; Giacomo Ponzetto; Andrei Shleifer
    Abstract: Across countries, education and democracy are highly correlated. We motivate empirically and then model a causal mechanism explaining this correlation. In our model, schooling teaches people to interact with others and raises the benefits of civic participation, including voting and organizing. In the battle between democracy and dictatorship, democracy has a wide potential base of support but offers weak incentives to its defenders. Dictatorship provides stronger incentives to a narrower base. As education raises the benefits of civic participation, it raises the support for more democratic regimes relative to dictatorships. This increases the likelihood of democratic revolutions against dictatorships, and reduces that of successful anti-democratic coups.
    JEL: D72 D74 H11
    Date: 2006–04
  4. By: Lorraine Dearden (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London); Howard Reed (Institute for Fiscal Studies); John Van Reenen
    Abstract: It is standard in the literature on training to use wages as a sufficient statistic for productivity. This paper examines the effects of work-related training on direct measures of productivity. Using a new panel of British industries 1983-1996 and a variety of estimation techniques we find that work-related training is associated with significantly higher productivity. A one percentage point increase in training is associated with an increase in value added per hour of about 0.6% and an increase in hourly wages of about 0.3%. We also show evidence using individual level datasets that is suggestive of training externalities.
    Keywords: Productivity, training, wages, panel data
    JEL: J31 C23 D24
    Date: 2005–08
  5. By: Mark R. Rosenzweig (Yale University); Junsen Zhang (Chinese University of Hong Kong and IZA Bonn)
    Abstract: In this paper we use a new data set describing households with and without twin children in China to quantify the trade-off between the quality and quantity of children using the incidence of twins that for the first time takes into account effects associated with the lower birthweight and closer-spacing of twins compared to singleton births. We show that examining the effects of twinning by birth order, net of the effects stemming from the birthweight deficit of twins, can provide upper and lower bounds on the trade-off between family size and average child quality. Our estimates indicate that, at least in one area of China, an extra child at parity one or at parity two, net of birthweight effects, significantly decreases the schooling progress, the expected college enrollment, grades in school and the assessed health of all children in the family. We also show that estimates of the effects of twinning at higher parities on the outcomes of older children in prior studies do not identify family size effects but are confounded by inter-child allocation effects because of the birthweight deficit of twins. Despite the evident significant trade-off between number of children and child quality in China, however, the findings suggest that the contribution of the one-child policy in China to the development of its human capital was modest.
    Keywords: family size, birthweight, twins, schooling, China
    JEL: J13 I12 I21
    Date: 2006–04
  6. By: Pascal Hetze (University of Rostock and Max Planck Institute for Demographic Research)
    Abstract: This paper explores the relationship between growth and unemployment. Knowledge formation is the source of growth, which includes the two dimensions technologies and skills. Both are connected through a technology-skill complementarity which may have limiting effects on the reallocation of labor and technology implementation in manufacturing. The reallocation of labor becomes necessary as growth leads to continuous job creation and job destruction. The ratio of job destruction to job creation identifies three regimes, two of which are associated with unemployment either due to restricted labor demand or due to skill shortages. While in the regime with full employment the model confirms the standard result that knowledge formation has positive effects on growth, the outcome is much more ambiguous if we consider a possible technology-skill mismatch and unemployment.
    Keywords: endogenous growth, knowledge formation, unemployment, skill mismatch
    JEL: E24 J63 O33
    Date: 2006
  7. By: Guisan, Carmen
    Abstract: Mexico and Turkey have experienced an important growth during the last decades of the 20th century but they have, in spite of that, a low level of real income per inhabitant in comparison with OECD averages. This paper analyses the main economic features of these countries, in comparison with other OECD countries, and suggest some economic policies of interest to foster economic development and employment during the next decades, with special focus on human capital and industrial development.
    Date: 2005
  8. By: David B. Audretsch; Taylor Aldridge; Alexander Oettl
    Date: 2006–01
  9. By: Frédéric Docquier (FNRS, IRES, Catholic University of Louvain and IZA Bonn); Oliver Paddison (ECLAC, United Nations Economic Commission for Latin America and the Caribbean); Pierre Pestieau (CREPP, University of Liège, CORE, PSE and CEPR)
    Abstract: This paper considers a three-overlapping-generations model of endogenous growth wherein human capital is the engine of growth. It first contrasts the laissez-faire and the optimal solutions. Three possible accumulation regimes are distinguished. Then it discusses a standard set of tax-transfer instruments that allow for decentralization of the social optimum. Within the limits of our model, the rationale for the standard pattern of intergenerational transfers (the working-aged financing the education of the young and the pension of the old) is seriously questioned. On pure efficiency grounds, the case for generous public pensions is rather weak.
    Keywords: endogenous growth, human capital, intergenerational transfers
    JEL: D90 H21 H52
    Date: 2006–04
  10. By: Stenberg, Anders (SOFI, Stockholms universitet)
    Abstract: The Adult Education Initiative (AEI) in Sweden was introduced in the autumn of 1997 and generated a massive expansion of subsidized adult comprehensive education. This paper uses data on a large sample of unemployed persons aged 25 to 55 to evaluate the effects of comprehensive upper secondary education as compared with the vocational part of Labour Market Training (LMT). Register data of annual wage earnings are available from 1991 to 2003. Fixed effects estimates indicate a weaker impact on wage earnings of comprehensive education relative to vocational training. However, for individuals aged 43-55 the parameters are insignificantly different from zero. Coefficient results close to zero are also obtained for females who prior to enrolment had two-year upper secondary school or resided in a municipality associated with a low average educational level.
    Keywords: Adult education; wage earnings
    JEL: H52 J68
    Date: 2005–10–03
  11. By: Maurice Kugler
    Abstract: In this paper we model the e¤ect of migrant remittances on job creation and human capital formation, given migration prospects. Model calibration of deep parameters was performed with data from the AMCO survey on migration and remittances. The simulations based on the model show that remittances can have o¤setting e¤ects on equilibrium human capital and labor market out- comes in the country of origin of migrants. First, remittances enhance school- ing opportunities for recipient households, and human capital formation can be augmented. Second, an increase in human capital supply by recipient house- holds induces job creation as labor demand increases in the origin country. If a su¢ ciently large share of remittance recipients do not migrate, then the net e¤ect is brain gain rather than brain drain ensuing remittances. The job cre- ation spillover in local labor markets increases the rate of return to schooling for nonrecipient households, whose members are less likely to migrate. As a result, there are more incentives to substitute consumption for human capital investment. At the same time, the rise in expected income due to the spillover induces higher desired consumption. If the ‘substitution e¤ect’outweighs the ‘income e¤ect’, then remittances will increase overall human capital and re- duce the unemployment rate. The calibration and simulation analyses suggest that he net e¤ect of remittances depends upon the accessibility of education and the degree and labor market frictions in the origin country as well as the immigration policy in the destination country of migrants.
    Date: 2006–03–01
  12. By: Christophe Muller (Departamento de Fundamentos del Análisis Económico Universidad de Alicante, Campus de San Vicente); Christophe Nordman (DIAL, IRD, Paris)
    Abstract: (english) We study the relationship between wages, human capital accumulation and work organisation in Morocco using matched worker-firm data for Metallurgical-electrical and Textile-clothing firms. While wages are found to rise with all human capital characteristics, returns to education and experience are much higher for the upper wages. Participation in on-the-job training is constrained by: a relevant industrial location; a minimal educational background; and an appropriate family situation. Moreover, work organisation and on-the-job training are dependent on the education process. Finally, we find strong interactions of human capital accumulation with involvement in chain gangs, team work and supervision. _________________________________ (français) Nous étudions le lien entre salaires, accumulation du capital humain et organisation du travail au Maroc en utilisant une enquête couplant des informations sur les entreprises et les employés de deux secteurs manufacturiers. Bien que les salaires soient sensibles à toutes les variables de capital humain, les rendements de l’éducation et de l’expérience sont beaucoup plus élevés pour les travailleurs à hauts revenus. La participation à la formation sur le tas du travailleur est favorisée par son secteur d’appartenance, son niveau d’éducation et sa situation familiale lorsqu’elle est favorable. De plus, l’organisation des tâches sur le lieu de travail (à la chaîne, en équipe) découle aussi du niveau de capital humain des salariés.
    Keywords: Africa, Morocco, Wages, On-the-job training, Human capital, Workplace organisation,Matched worker-firm data, Maroc, Salaires, Formation sur le tas, Capital humain, Organisation du travail, Données liées employeurs-employés.
    JEL: J24 J31 O12
    Date: 2006–03
  13. By: Patacchini, Eleonora; Zenou, Yves
    Abstract: We investigate the sources of differences in school performance between students of different races by focusing on identity issues. We find that having a higher percentage of same-race friends has a positive effect of white teenagers’ test score while having a negative effect on blacks’ test scores. However, the higher the education level of a black teenager’s parent, the lower this negative effect, while for whites, it is the reverse. It is thus the combination of the choice of friends (which is a measure of own identity) and the parent’s education that are responsible for the difference in education attainment between students of different races but also between students of the same race. One interesting aspects of this paper is to provide a theoretical model that grounds the instrumental variable approach used in the empirical analysis to deal with endogeneity issues.
    Keywords: education achievement; endogeneity issues; ethnic minorities; peer effects
    JEL: A14 I21 J15 J24
    Date: 2006–03
  14. By: Erich Battistin (Institute for Fiscal Studies); Barbara Sianesi (Institute for Fiscal Studies)
    Abstract: In this paper we study the impact of misreported treatment status on the estimation of causal treatment effects. We characterise the bias introduced by misclassification on the average treatment effect on the treated under the assumption of selection on observables. Although the bias of matching-type estimators computed from misclassified data cannot in general be signed, we show that the bias is most likely to be downward if misclassification does not depend on variables entering the selection-on-observables assumption, or only depends on such variables via the propensity score index. We extend the framework to multiple treatments. We provide results to bound the returns to a number of educational qualifications in the UK semi-parametrically, and by using the unique nature of our data we assess the plausibility for the two biases from measurement error and from omitted variables to cancel out.
    Keywords: Measurement Error, Misclassification, Programme Evaluation, Returns to Educational Qualifications, Treatment Effect, Bounds
    JEL: C10 I20 J31
    Date: 2006–04
  15. By: Alan Manning (London School of Economics); Jörn-Steffen Pischke (London School of Economics and IZA Bonn)
    Abstract: British secondary schools moved from a system of extensive and early selection and tracking in secondary schools to one with comprehensive schools during the 1960s and 70s. Before the reform, students would take an exam at age eleven, which determined whether they would attend an academically oriented grammar school or a lower level secondary school. The reform proceeded at an uneven pace in different areas, so that both secondary school systems coexist during the 1960s and 70s. The British transition therefore provides an excellent laboratory for the study of the impact of a comprehensive versus a selective school system on student achievement. Previous studies analyzing this transition have typically used a value-added methodology: they compare outcomes for students passing through either type of school controlling for achievement levels at the time of entering secondary education. While this seems like a reasonable research design, we demonstrate that it is unlikely to successfully eliminate selection effects in who attends what type of school. Very similar results are obtained by looking at the effect of secondary school environment on achievement at age 11 and controlling for age 7 achievement. Since children only enter secondary school at age 11, these effects are likely due to selection bias. Careful choice of treatment and control areas, and using political control of the county as an instrument for early implementation of the comprehensive regime do not solve this problem.
    Keywords: tracking, selective secondary schooling, comprehensive schools
    JEL: I21 I28
    Date: 2006–04
  16. By: Borghans Lex; Golsteyn Bart (ROA rm)
    Abstract: After graduation many students start working in sectors not related to their field of study or participate in training targeted at work in other sectors. In this paper, we look at mobility immediately after graduation from the perspective that educational choices have been made when these pupils had little experience of the actual working life in these professions. We develop a model where students accumulate partially transferable human capital but also learn about their professional preferences at the university and during the first years in the labor market. As a consequence of this newly acquired insight, these young workers might realize that working in another occupational field would better fit their preferences, although they are better equipped to work in their own field. The empirical analysis reveals that if wages are 1% lower due to lower skill transferability, the probability that a graduate who regrets his choice actually switches decreases by 2.2 percentage points, while those who switch on average take 0.3 months additional education.
    Keywords: education, training and the labour market;
    Date: 2006
  17. By: Fabio Sabatini
    Abstract: This paper carries out an empirical assessment of the relationship between social capital and labour productivity in small and medium enterprises in Italy. By means of structural equations models, the analysis investigates the effect of different aspects of the multifaceted concept of social capital. The bonding social capital of strong family ties and the bridging social capital shaped by informal ties connecting friends and acquaintances are proved to exert a negative effect on labour productivity, the economic performance, and human development. On the contrary, the linking social capital of voluntary organizations positively influences such outcomes.
    Keywords: Labour productivity, Small and medium enterprises, Social capital, Social networks, Structural equations models
    JEL: J24 R11 O15 O18 Z13
    Date: 2006–02
  18. By: Andreas Ammermueller (ZEW, Mannheim); Jörn-Steffen Pischke (London School of Economics and IZA Bonn)
    Abstract: We estimate peer effects for fourth graders in six European countries. The identification relies on variation across classes within schools. We argue that classes within primary schools are formed roughly randomly with respect to family background. Similar to previous studies, we find sizeable estimates of peer effects in standard OLS specifications. The size of the estimate is much reduced within schools. This could be explained either by selection into schools or by measurement error in the peer background variable. When we correct for measurement error we find within school estimates close to the original OLS estimates. Our results suggest that the peer effect is modestly large, measurement error is important in our survey data, and selection plays little role in biasing peer effects estimates. We find no significant evidence of non-linear peer effects.
    Keywords: peer effects, measurement error
    JEL: I21 J24
    Date: 2006–04
  19. By: Fabio Sabatini
    Abstract: This paper carries out an empirical assessment of the causal nexus connecting social capital's diverse aspects to the "quality" of economic development in Italy. The analysis accounts for three main social capital dimensions (i.e. bonding, bridging and linking social capital) and measures them through synthetic indicators built by means of principal component analyses performed on a dataset including multiple variables. The quality of development is measured through human development and indicators of the state of health of urban ecosystems, public services, social protection, gender equality, and labour markets. The causal relationship between social capital's and development's different dimensions is then assessed through structural equations models. The analysis in this paper provides a relevant proof of Putnam's claims on the positive role of civil society organizations in development processes.
    Keywords: Social capital, Social networks, Civil Society, Economic development, Social quality, Labour precariousness, Structural Equations Modelling
    JEL: C39 O15 O18 R11 Z13
    Date: 2006–04
  20. By: Samuel Berlinski (Institute for Fiscal Studies and University College, London); Sebastian Galiani; Paul Gertler
    Abstract: Although the theoretical case for universal pre-primary education is strong, the empirical foundation is weak. In this paper, we contribute to the empirical case by investigating the effect of a large expansion of universal pre-primary education on subsequent primary school performance in Argentina. We estimate that one year of preprimary school increases average third grade test scores by 8 percent of a mean or by 23 percent of the standard deviation of the distribution of test scores. We also find that preprimary school attendance positively affects student’s self-control in the third grade as measured by behaviors such as attention, effort, class participation, and discipline.
    Date: 2006–03

This nep-hrm issue is ©2006 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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