nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒09‒23
thirteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Human Capital and Ethnic Self-Identification of Migrants By Laura Zimmermann; Liliya Gataullina; Amelie Constant; Klaus F. Zimmermann
  2. What Makes a Die-Hard Entrepreneur? Beyond the ‘Employee or Entrepreneur’ Dichotomy By Andrew Burke; Felix FitzRoy; Michael A. Nolan
  3. Inside the Family Firm By Bennedsen, Morten; Nielsen, Kasper; Pérez-González, Francisco; Wolfenzon, Daniel
  4. The Role of Marriage in Immigrants’ Human Capital Investment under Liquidity Constraints By Sarit Cohen-Goldner; Chemi Gotlibovski; Nava Kahana
  5. Optimal Tax Credits in the Context of the German System of Apprenticeship Training and Social Security By Kai-Joseph Fleischhauer
  6. Improving Education Achievement and Attainment in Luxembourg By David Carey; Ekkehard Ernst
  7. First and Second Generation Immigrant Educational Attainment and Labor Market Outcomes: A Comparison of the United States and Canada By Abdurrahman Aydemir; Arthur Sweetman
  8. The Speed of Employer Learning and Job Market Signaling Revisited By Steffen Habermalz
  9. Industry Competition and Total Factor Productivity Growth By Michael D. Giandrea
  10. Brain Drain from Turkey: An Investigation of Students’ Return Intentions By Nil Demet Güngör; Aysit Tansel
  11. How and Why has Teacher Quality Changed in Australia? By Andrew Leigh; Chris Ryan
  12. The Effects of Accessibility to University Education on Enrollment Decisions, Geographical Mobility, and Social Recruitment By Eliasson, Kent
  13. Patent Laws and Innovation in China By Linda Y. Yueh

  1. By: Laura Zimmermann (University of Oxford and IZA Bonn); Liliya Gataullina (IZA Bonn); Amelie Constant (IZA Bonn, Georgetown University and DIW Berlin); Klaus F. Zimmermann (IZA Bonn, University of Bonn, DIW Berlin and Free University of Berlin)
    Abstract: The paper investigates the role of human capital for migrants' ethnic ties towards their home and host countries. Pre-migration characteristics dominate ethnic self-identification. Human capital acquired in the host country does not affect the attachment to the receiving country.
    Keywords: ethnic self-identification, first-generation migrants, gender, ethnicity, human capital
    JEL: F22 J15 J16 J24 Z10
    Date: 2006–09
  2. By: Andrew Burke (Cranfield University and Max Planck Institute of Economics); Felix FitzRoy (University of St Andrews and IZA Bonn); Michael A. Nolan (University of Hull)
    Abstract: The paper makes three contributions to the economics literature on entrepreneurship. We offer a new measure of entrepreneurship which accounts for variations in persistence in selfemployment and as a result avoids the weakness of approaches which categorise an individual as an entrepreneur by observing their occupation at just one point in their career. We outline an econometric methodology to account for this approach and find that it is superior to probit/logit models which have dominated the literature. While our results indicate that this existing literature is good at explaining an individual’s propensity to try selfemployment, we find that entrepreneurial persistence is determined by a different model and unearth some new insights into the roles of early career experience, finance, role models, gender and the unemployment push effect.
    Keywords: self-employment, entrepreneurial persistence, count data
    JEL: J23 C25
    Date: 2006–09
  3. By: Bennedsen, Morten (Department of Economics, Copenhagen Business School); Nielsen, Kasper (Department of Economics, Copenhagen Business School); Pérez-González, Francisco (Department of Economics, Copenhagen Business School); Wolfenzon, Daniel (Department of Economics, Copenhagen Business School)
    Abstract: This paper uses a unique dataset from Denmark to investigate (1) the role of family characteristics in corporate decision making, and (2) the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or an external chief executive officer (CEO). We show that a departing CEO’s family characteristics have a strong predictive power in explaining CEO succession decisions: family CEOs are more frequently selected the larger the size of the family, the higher the ratio of male children and when the departing CEOs had only had one spouse. We then analyze the impact of family successions on performance. We overcome endogeneity and omitted variables problems of previous papers in the literature by using the gender of a departing CEO’s first-born child as an instrumental variable (IV) for family successions. This is a plausible IV as male first-child family firms are more likely to pass on control to a family CEO than female first-child firms, but the gender of the first child is unlikely to affect firms' performance. We find that family successions have a dramatic negative causal impact on firm performance: profitability on assets falls by at least 6 percentage points around CEO transitions. These estimates are significantly larger than those obtained using ordinary least squares. Finally, our findings demonstrate that professional nonfamily CEOs provide extremely valuable services to the organizations they work for.
    Keywords: Family firms; Successions; CEO turnover; governance
    JEL: G32 G34 M13
    Date: 2005–09–14
  4. By: Sarit Cohen-Goldner (Bar-Ilan University); Chemi Gotlibovski (Academic College of Tel-Aviv Yaffo); Nava Kahana (Bar-Ilan University and IZA Bonn)
    Abstract: This paper presents a two-period human capital investment model of married and single immigrants under binding liquidity constraints, which explains alternative patterns in the host country's labor market. These patterns are also compared to those of natives who face a perfect capital market. By extending Eckstein and Weiss’ model (2004) from the case of single immigrants with accessibility to a perfect capital market to the case of creditconstrained immigrant families, it is shown that the comparative advantage in investment that determines which spouse will invest more in local skills depends on his/her imported human capital growth rate rather than on its level. This comparative advantage can lead to full or partial specialization in work and investment activities within immigrant households. However, the level invested by each spouse is non-increasing with the level of the imported human capital of the spouse with the comparative advantage in investment, whereas it is nondecreasing with the level of imported human capital of the other spouse. A comparison of pre and post marriage investment indicates that the spouse with the comparative advantage in investment will increase his/her investment in human capital after his/her marriage, whereas the other spouse will decrease it. The more efficient investment due to marriage enables the achievement of a Pareto improvement.
    Keywords: human capital investment, immigrants, marriage, binding liquidity constraints
    JEL: D10 J24 J61
    Date: 2006–09
  5. By: Kai-Joseph Fleischhauer
    Abstract: There is an ongoing discussion in Germany about the implementation of tax credits in order to reintegrate low-skilled workers into the labor market. This paper aims at analyzing the policy instrument of tax credits in a theoretical model that systematically compares its costs and benefits in the context of the German system of apprenticeship training and social security. Building on recent training literature, a two-period partial-equilibrium model is developed that allows for worker heterogeneity in ability. In our model, the implementation of tax credits in terms of a negative income tax solves a trade-off with respect to overall welfare. While tax credits reduce the number of unemployed workers at the extensive margin, they increase at the same time the opportunity costs of apprenticeship training, which implies that human capital formation is decreased. Furthermore, the model suggests that the reintegration of those workers at the bottom of the ability-distribution into the labor market is not optimal. The additional implementation of minimum wages is counteractive to the reduction of unemployment because firms would thus be prevented from employing workers with very low productivities.
    Keywords: Unemployment of Low-Skilled Workers, Tax Credits, Labor Supply, Human Capital Formation
    JEL: H31 I38 J21 J24 J31 J68
    Date: 2006–09
  6. By: David Carey; Ekkehard Ernst
    Abstract: Improving education achievement in Luxembourg is a priority for strengthening productivity growth and enhancing residents. employment prospects in the private sector, where employers mainly hire cross-border workers. Student achievement in Luxembourg is below the OECD average according to the 2003 OECD PISA study, with the performance gap between immigrant and native students being above average. A factor that makes learning more difficult in Luxembourg than in other countries is the use of three languages of instruction (Lëtzebuergesch, German and French). New empirical evidence presented in this paper based on the PISA tests suggests that the reforms over the past decade or so to attenuate these difficulties have had considerable success: the adverse impact of immigrant status on PISA test scores is around the OECD average. The fact that the performance gap between immigrant and native students is nevertheless greater than average reflects other factors, notably the relatively large difference in socio-economic background between immigrant and native students. The paper also discusses further reforms that are underway or planned to improve achievement of immigrant students. Another feature of Luxembourg.s education system is that it is highly stratified, with children being sorted into a large number of parallel tracks at an early stage and there being a high rate of grade repetition. International evidence suggests that stratification increases the impact of socio-economic background on student achievement. Reforms to reduce stratification are discussed in the remainder of the paper, together with reforms to enhance achievement more generally by improving teaching skills and basing school programmes on key competences. This paper relates to the 2006 Economic Survey of Luxembourg ( <P>Améliorer la performance du système éducatif au Luxembourg <BR>Améliorer la réussite scolaire au Luxembourg constitue une priorité pour renforcer la croissance de la productivité et augmenter les perspectives de l'emploi des résidents dans le secteur privé, dans lequel les employeurs ont principalement recours à de la main-d'oeuvre transfrontalière. La réussite scolaire des élèves au Luxembourg est en dessous de la moyenne de l'OCDE selon l'étude PISA de 2003, avec une différence de réussite entre élèves immigrés et natifs au-dessus de la moyenne. Un des facteurs qui rend l'apprentissage plus difficile au Luxembourg que dans d'autres pays est l'utilisation de trois langues d'instruction (luxembourgeois, allemand et français). Basés sur les tests PISA, les nouveaux travaux empiriques présentés dans ce papier suggère que les réformes durant cette dernière décennie visant à atténuer ces difficultés ont connu un succès notable : l'impact négatif du statut d'immigré sur les performances PISA est autour de la moyenne de l'OCDE. Certes, il existe une différence de résultats entre les élèves immigrés et nationaux -- différence supérieure à la moyenne -- mais cela est dû à d'autres facteurs, notamment les origines socio-économiques différentes des élèves immigrés et nationaux. Le papier discute également d'autres réformes actuellement en route ou planifiées visant à augmenter la réussite scolaire des élèves immigrés. Une autre caractéristique du système éducatif luxembourgeois est sa stratification accrue, qui sélectionne tôt les enfants dans un nombre important de parcours parallèles. Par ailleurs, le redoublement de classe est important. Les comparaisons internationales suggèrent que la stratification augmente l'impact du cadre socio-économique sur la réussite scolaire de l'élève. Le papier discute ainsi des réformes sur une réduction de stratification, mais aussi des réformes visant une augmentation générale de la réussite scolaire en augmentant les compétences d'enseignement des professeurs ainsi qu'une réorientation des programmes scolaires autour des compétences clés. Ce document se rapporte à l'Étude économique du Luxembourg 2006 (
    Keywords: education, éducation, formation professionnelle, PISA, survey data analysis, secondary education, attainment, school system, stratification, tracking, streaming, teachers' skills, trilingual education, pre-school education, immigration and socio-economic background, general education, key competences, PISA, réussite scolaire, analyse des données d'enquête, éducation secondaire, système scolaire, stratification, compétences des enseignants, éducation trilingue, éducation préscolaire, immigration et cadre socio-économique, éducation générale, compétences clés
    JEL: I21 I28 J24
    Date: 2006–09–04
  7. By: Abdurrahman Aydemir (Statistics Canada); Arthur Sweetman (Queen's University and IZA Bonn)
    Abstract: The educational and labor market outcomes of the first, first-and-a-half, second and third generations of immigrants to the United States and Canada are compared. These countries’ immigration flows have large differences in source countries, scale and timing, and Canada has a much larger policy emphasis on skilled workers. Following from these, the educational attainment of US immigrants is currently lower than that in Canada and the intergenerational transmission of education is expected to cause the gap to grow. This in turn influences earnings. Controlling only for age, the current US second generation has earnings comparable to those of the third, while earnings are higher for the second generation in Canada. Interestingly, the positive wage gap in favour of first-and-a-half and second generation immigrants in Canada is exceeded by the gap in educational attainment, but a lower immigrant rate of return attenuates education’s impact. Moreover, observable characteristics explain little of the difference in earnings outcomes across generations in the US but their introduction into an earnings equation causes the Canadian second generation premium to switch signs and become negative relative to the third.
    Keywords: immigration, second generation, Canada, United States, education
    JEL: J61 J62 I29
    Date: 2006–09
  8. By: Steffen Habermalz (Northwestern University and IZA Bonn)
    Abstract: This paper discusses the claim made in Altonji and Pierret (1997) and Lange (2005) that a high speed of employer learning indicates a low value of job market signaling. The claim is first discussed intuitively in light of Spence’s original model and then evaluated in a simple extension of a model developed in Altonji and Pierret (1997). The analysis provided indicates that, if employer learning is incomplete, a high speed of employer learning is not necessarily indicative of a low value of job market signaling.
    Keywords: employer learning, signaling
    JEL: I20 D8 J41
    Date: 2006–09
  9. By: Michael D. Giandrea (U.S. Bureau of Labor Statistics)
    Abstract: This paper analyzes the impact of changes in the competitive market structure on an industry's total factor productivity (TFP) growth. The impact of horizontal mergers on TFP growth is of particular interest. The number of proposed horizontal mergers among U.S. firms totaled 28,818 from 1996 to 2005, while the number of U.S. Department of Justice investigations of proposed mergers totaled 1,303 during the same time period. The impact of mergers upon total factor productivity growth is rightly a topic for consideration. Merger participants routinely claim that mergers will result in welfare improving efficiency gains. If true, these gains should translate into increased TFP growth. This paper estimates this effect and others after presenting a model of TFP growth as a function of changes in the competitive market structure of an industry, changes in production diversification measured at the establishment level, and changes in output per establishment and the number of establishments. Mergers are found to have a positive impact upon TFP growth, accounting for 0.36 percentage points of total factor productivity growth between census years.
    Keywords: Productivity Growth, Mergers, Competition
    JEL: D2 L1 L4
    Date: 2006–09
  10. By: Nil Demet Güngör (Atilim University); Aysit Tansel (Middle East Technical University and IZA Bonn)
    Abstract: The emigration of skilled individuals from Turkey attracted greater media attention and the interest of policymakers in Turkey, particularly after the experience of recurrent economic crises that have led to an increase in unemployment among the highly educated young. This study estimates a model of return intentions using a dataset compiled from an Internet survey of Turkish students residing abroad. The findings of this study indicate that, as expected, higher salaries offered in the host country and lifestyle preferences, including a more organized environment in the host country, increase the probability of student non-return. However, the analysis also points to the importance of prior return intentions and the role of the family in the decision to return to Turkey or stay overseas. It is also found that the compulsory service requirement attached to government scholarships increases the probability of student return. Turkish Student Association membership also increases return intentions. Longer stay durations, on the other hand, decrease the probability of return. These findings have important policy implications.
    Keywords: student non-return, brain drain, return intentions, Turkey
    JEL: F20 F22
    Date: 2006–09
  11. By: Andrew Leigh; Chris Ryan
    Abstract: International research suggests that differences in teacher performance can explain a large portion of student achievement. Yet little is known about how the quality of the Australian teaching profession has changed over time. Using consistent data on the academic aptitude of new teachers, we compare those who have entered the teaching profession in Australia over the past two decades. We find that the aptitude of new teachers has fallen considerably. Between 1983 and 2003, the average percentile rank of those entering teacher education fell from 74 to 61, while the average rank of new teachers fell from 70 to 62. One factor that seems to have changed substantially over this period is average teacher pay. Compared to non-teachers with a degree, average teacher pay fell substantially over the period 1983-2003. Another factor is pay dispersion in alternative occupations. During the 1980s and 1990s, non-teacher earnings at the top of the distribution rose faster than earnings at the middle and bottom of the distribution. For an individual with the potential to earn a wage at the 90th percentile of the distribution, a non-teaching occupation looked much more attractive in the 2000s than it did in the 1980s. We believe that both the fall in average teacher pay, and the rise in pay differentials in non-teaching occupations are responsible for the decline in the academic aptitude of new teachers over the past two decades.
    Keywords: test scores, teacher salary, occupational choice
    JEL: I21 I28 J31
    Date: 2006–09
  12. By: Eliasson, Kent (National Institute for Working Life)
    Abstract: This paper focuses on how accessibility to higher education affects university enrollment decisions in Sweden. The analysis refers to the autumn semester of 1996 and is based on approximately 835,000 individuals aged 1929. The empirical results show that the probability of enrollment increases with accessibility to university education. The findings also reveal that accessibility adds to the likelihood of enrollment within the region of residence. Both these results are robust with regard to different specifications of accessibility. Moreover the empirical results indicate that the enrollment decisions of individuals with a less privileged background are more sensitive to accessibility to university education than those of individuals from a more advantageous background. The influence of accessibility on enrollment decreases significantly with individual ability, parental education, and parental earnings.
    Keywords: University enrollment; accessibility; geographical mobility; social recruitment
    JEL: A22 I21 R23
    Date: 2006–09–11
  13. By: Linda Y. Yueh
    Abstract: This paper explores whether the patent law and intellectual property rights (IPR) system have resulted in innovation in China during the reform period. It appears that the patent laws have produced a stock of patents, where the success rates of patent applications are fairly uniform across the country. As the IPR framework does not vary across provinces, we asked which factors would explain innovation in China. We find the main determinants of patents to be R&D expenditure and foreign direct investment, but not the number of researchers, though the level of human capital matters. We conclude that the patent laws in China have been associated with innovation that has accompanied economic growth despite imperfections in the legal system.
    Keywords: Intellectual Property Rights, Patent Laws, Law and Economics, Innovation, Economic Growth, China
    JEL: O34 K29 O4 O53 K19
    Date: 2006

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