nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒10‒28
sixteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Does School Tracking Affect Equality of Opportunity? New International Evidence By Giorgio Brunello; Daniele Checchi
  2. Participation and Schooling in a Public System of Higher Education By Kelchtermans, Stijn; Verboven, Frank
  3. Differences in Wage Growth by Education Level: Do Less-Educated Workers Gain Less from Work Experience? By Helen Connolly; Peter Gottschalk
  4. Human Capital and Wages in Exporting Firms By Jakob Roland Munch; Jan Rose Skaksen
  5. Intentions to Return of Undocumented Migrants: Illegality as a Cause of Skill Waste By Nicola D. Coniglio; Giuseppe De Arcangelis; Laura Serlenga
  6. Is there a Causal Effect of High School Math on Labor Market Outcomes? By Juanna Schrøter Joensen; Helena Skyt Nielsen
  7. Investments into Education - Doing as the Parents Did By Kirchsteiger, Georg; Sebald, Alexander
  8. Risk Aversion and Human Capital Investment: A structural Econometric Model By Brodaty, Thomas; Gary-Bobo, Robert J.; Prieto, Ana
  9. Mind the gap? Estimating the effects of postponing higher education By Holmlund, Bertil; Liu, Qian; Nordström Skans, Oskar
  10. Spatial Mobility and Returns to Education: Some Evidence from a Sample of French Youth By Philippe Lemistre; Nicolas Moreau
  11. The Earnings Effect of Education at Community Colleges By Dave E. Marcotte
  12. Technological Leadership, Human Capital and Economic Growth: A Spatial Econometric Analysis for U.S. Counties, 1969-2003 By Valerien Pede; Raymond Florax; Henri de Groot
  13. Competition, Innovation and Growth with Limited Commitment By Marimon, Ramon; Quadrini, Vincenzo
  14. Close Neighbours Matter: Neighbourhood Effects on Early Performance at School By Goux, Dominique; Maurin, Eric
  15. Over-Education in Multilingual Economies: Evidence from Catalonia By Maite Blazquez; Silvio Rendon
  16. The Skill-Weights Approach on Firm Specific Human Capital: Empirical Results for Germany By Uschi Backes-Gellner; Johannes Mure

  1. By: Giorgio Brunello (University of Padova, Collegio Carlo lberto Torino, CESifo and IZA Bonn); Daniele Checchi (University of Milano and IZA Bonn)
    Abstract: This paper investigates whether at the interaction between family background and school tracking affects human capital accumulation. Our a priori view is that more tracking should reinforce the role of parental privilege, and thereby reduce equality of opportunity. Compared to the current literature, which focuses on early outcomes, such as test scores at 13 and 15, we look at later outcomes, including literacy, dropout rates, college enrolment, employability and earnings. While we do not confirm previous results that tracking reinforces family background effects on literacy, we do confirm our view when looking at educational attainment and labour market outcomes. When looking at early wages, we find that parental background effects are stronger when tracking starts earlier. We reconcile the apparently contrasting results on literacy, educational attainment and earnings by arguing that the signalling role of formal education – captured by attainment – matters more than actual skills – measured by literacy – in the early stages of labour market experience.
    Keywords: education, tracking, literacy, wages
    JEL: J24
    Date: 2006–09
  2. By: Kelchtermans, Stijn; Verboven, Frank
    Abstract: We analyze the determinants of participation (whether to study) and schooling (where and what to study) in a public system of higher education, based on a unique dataset of all eligible high school pupils in an essentially closed region (Flanders). We find that pupils perceive the available institutions and programs as close substitutes, implying an ambiguous role for travel costs: they hardly affect the participation decisions, but have a strong impact on the schooling decisions. In addition, high school background plays an important role in both the participation and schooling decisions. To illustrate how our empirical results can inform the debate on reforming public systems, we assess the effects of tuition fee increases. Uniform cost-based tuition fee increases achieve most of the welfare gains; the additional gains from fee differentiation are relatively unimportant. These welfare gains are quite large if one makes conservative assumptions on the social cost of public funds, and there is a substantial redistribution from students to outsiders.
    Keywords: higher education; participation; policy reform; schooling
    JEL: I2 I23
    Date: 2006–05
  3. By: Helen Connolly (Northeastern University); Peter Gottschalk (Boston College and IZA Bonn)
    Abstract: This paper revisits the old question of whether wage growth differs by education level. Do more educated workers invest more than less educated workers in firm specific, sector specific or general human capital? Do they gain more from improved job match? The paper makes both a methodological and a substantive contribution by offering an alternative strategy for separately identifying returns to general experience, sector specific experience, firm tenure, and job match. Our empirical results, based on the Survey of Income and Program Participation, show that overall wage growth is higher for more-educated workers. This reflects higher returns to general experience for college graduates and higher returns to sector experience for high school graduates. Improvements in job match grow monotonically with education.
    Keywords: low wage workers, returns to tenure, sector experience, general experience, job match
    JEL: J30
    Date: 2006–09
  4. By: Jakob Roland Munch (Department of Economics, University of Copenhagen); Jan Rose Skaksen (Copenhagen Business School)
    Abstract: This paper studies the link between a firms education level, export performance and wages of its workers. We argue that firms may escape intense competition in international markets by using high skilled workers to differentiate their products. This story is consistent with our empirical results. Using a very rich matched worker-firm longitudinal dataset we find that firms with high export intensities pay higher wages. However, an interaction term between export intensity and skill intensity has a positive impact on wages and it absorbs the direct effect of the export intensity. That is, we find an export wage premium, but it accrues to workers in firms with high skill intensities.
    Keywords: exports; wages; human capital; rent sharing; matched worker- firm data
    JEL: J30 F10 I20
    Date: 2006–10
  5. By: Nicola D. Coniglio (Norwegian School of Economics and Business Administration (NHH) and University of Bari); Giuseppe De Arcangelis (University of Rome “La Sapienza”); Laura Serlenga (University of Bari and IZA Bonn)
    Abstract: In this paper we show that highly skilled undocumented migrants are more likely to return home than migrants with low or no skills when illegality causes “skill waste”, i.e. when illegality reduces the rate of return of individual capabilities (i.e. skills and human capital) in both the labor and the financial markets of the country of destination. This proposition is first illustrated in a simple life-cycle framework, where illegality acts as a tax on skills, and then is tested on a sample of apprehended immigrants that crossed unlawfully the Italian borders in 2003. The estimation confirms that the intention to return to the home country is more likely for highly skilled than low-skill illegal immigrants. The presence of migration networks in the destination country may lower the skill-waste effect. The empirical result of this paper contrasts with the common wisdom on return decisions of legal migrants, according to which low-skill individuals are more likely to go back home rather than highly skilled migrants.
    Keywords: illegal migration, labor skills, survey data
    JEL: F22 C25
    Date: 2006–10
  6. By: Juanna Schrøter Joensen (University of Aarhus); Helena Skyt Nielsen (University of Aarhus and IZA Bonn)
    Abstract: Outsourcing of jobs to low-wage countries has increased the focus on the accumulation of skills – such as Math skills – in high-wage countries. In this paper, we exploit a high school pilot scheme to identify the causal effect of advanced high school Math on labor market outcomes. The pilot scheme reduced the costs of choosing advanced Math because it allowed for at more flexible combination of Math with other courses. We find clear evidence of a causal relationship between Math and earnings for the students who are induced to choose Math after being exposed to the pilot scheme. The effect partly stems from the fact that these students end up with higher education.
    Keywords: Math, high school curriculum, instrumental variable, local average treatment effect
    JEL: I20 J24
    Date: 2006–10
  7. By: Kirchsteiger, Georg; Sebald, Alexander
    Abstract: Empirical evidence suggests that parents with higher levels of education generally also attach a higher importance to the education of their children. This implies an intergenerational chain transmitting the attitude towards the formation of human capital from one generation to the next. We incorporate this intergenerational chain into an OLG-model with endogenous human capital formation. In absence of any state intervention such an economy might be characterized by multiple steady states. A temporary public investment into human capital formation is then needed for a transition from a steady state with low human capital levels to one with a higher human capital level. Furthermore, it can be shown that even the best steady state is suboptimal when the human capital is privately provided. This inefficiency can be overcome by a permanent public subsidy for education.
    Keywords: education subsidy; human capital formation; indirect reciprocity
    JEL: H23 H52 I2
    Date: 2006–05
  8. By: Brodaty, Thomas; Gary-Bobo, Robert J.; Prieto, Ana
    Abstract: We propose to model individual educational investments as a rational decision, maximizing expected utility, conditional on some characteristics observed by the student, under the combined risks affecting future wages and schooling duration. Assuming that students' attitudes toward risk can be represented by a CRRA utility, we show that the risk-aversion parameter can be identified in a natural way, using the variation in school-leaving ages, conditional on certified educational levels. Estimation can be performed by means of classic Maximum Likelihood methods. The model can easily be compared with a non-structural, simplified version, which is a standard wage equation with endogenous dummy variables representing education levels, education levels being themselves determined by an Ordered Probit model. We find small but significant values of the coefficient of relative risk aversion, between 0.1 and 0.9. These results are obtained with a rich sample of 12,500 young men who left the educational system in 1992, in France.
    Keywords: econometrics; human capital; returns to education; risk aversion
    JEL: I2 J24 J31
    Date: 2006–06
  9. By: Holmlund, Bertil (Department of Econoics, Uppsala University); Liu, Qian (Department of Economics, Uppsala University); Nordström Skans, Oskar (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: This paper estimates the effects on earnings of “gap years” between high school and university enrollment. The effect is estimated by means of standard earnings functions augmented to account for gap years and a rich set of control variables using administrative Swedish data. We find that postponement of higher education is associated with a persistent and non-trivial earnings penalty. The main source of the persistent penalty appears to be the loss of work experience after studies. Two years postponement reduces the present value of life time earnings by 40-50 percent of annual earnings at age 40.
    Keywords: timing of education; schooling interruptions; work experience
    JEL: I23 J24 J31
    Date: 2006–10–11
  10. By: Philippe Lemistre (Cereq and Lirhe, University of Toulouse 1); Nicolas Moreau (Gremaq, University of Toulouse 1 and IZA Bonn)
    Abstract: The purpose of this article is to reevaluate the returns to geographic mobility and to the level of education, taking into account the interaction between these two variables. We have at our disposal an original French database that permits precise calculation of the distance between the place of education and the location of first employment. We thus capture mobility without a priori regarding the geographical areas selected, and we use kilometric thresholds to estimate the returns to spatial mobility. Our results suggest decreasing returns to spatial mobility as the distance covered rises and increasing returns to mobility with higher levels of education. In addition, for all levels of education, including the lowest, returns to geographic mobility prove to be positive, for one threshold at least and several distances.
    Keywords: spatial mobility, returns to schooling, earnings function
    JEL: J31 J61 I21
    Date: 2006–10
  11. By: Dave E. Marcotte (University of Maryland Baltimore County and IZA Bonn)
    Abstract: In this paper, I make use of data from the 2000 follow-up of the National Education Longitudinal Survey (NELS) post-secondary education transcript files to extend what is known about the value of education at community colleges. I examine the effects of enrollment in community colleges on students’ subsequent earnings. I estimate the effects of credits earned separate from credentials because community colleges are often used as a means for students to engage in study not necessarily leading to a degree or certificate. I find consistent evidence of wage and salary effects of both credits and degrees, especially for women. There is no substantial evidence that enrollment in vocational rather than academic coursework has a particularly beneficial effect, however.
    Keywords: community college, training, earnings, human capital
    JEL: I2 J24 J31
    Date: 2006–09
  12. By: Valerien Pede; Raymond Florax (Department of Agricultural Economics, College of Agriculture, Purdue University); Henri de Groot (Department of Spatial Economnics, Frije Universiteit, The Netherlands)
    Abstract: The traditional view of cities as monocentric conglomerates of people clustered around an employment center, driving economic growth in cities that subsequently trickles down to the hinterland, is increasingly being challenged. In particular, the role of space, technological leadership, human capital, increasing returns to scale and industrial clustering as well as hierarchical organization principles have been emphasized in the more recent literature. This paper utilizes exploratory and spatial econometric data analysis techniques to investigate these issues for U.S. counties using data from 1969 through 2003. Ultimately, contiguous and hierarchical organization and interaction patterns are captured using an endogenous growth model allowing for spatial effects, inspired by earlier work on human capital and technology gaps. We investigate a neoclassical growth model and compare it to a spatial version of an endogenous growth model allowing for “domestic” investment in human capital and catch-up to the technology leader, and find that human capital strongly contributes to growth in a neoclassical setting, but much less so in an endogenous setting. In the endogenous model the catch-up term dominates in comparison to “domestic” human capital effects.
    Keywords: economic growth, human capital, technological leadership
    JEL: C21 I23 O33 R12
    Date: 2006
  13. By: Marimon, Ramon; Quadrini, Vincenzo
    Abstract: We study how barriers to competition - such as, restrictions to business start-up and strict enforcement of covenants or IPR - affect the investment in knowledge capital when contracts are not enforceable. These barriers lower the competition for human capital and reduce the incentive to accumulate knowledge. We show in a dynamic general equilibrium model that this mechanism has the potential to account for significant cross-country income inequality.
    Keywords: contract enforcement; economic growth; human capital
    JEL: L14 O4
    Date: 2006–09
  14. By: Goux, Dominique; Maurin, Eric
    Abstract: Children's outcomes are strongly correlated with those of their neighbours. The extent to which this is causal is the subject of an extensive literature. An identification problem exists because people with similar characteristics are observed to live in close proximity. Another major difficulty is that neighbourhoods measured in available data are often considerably larger than those which matter for outcomes (i.e. close neighbours). Several institutional features of France enable us to address these problems. We find that an adolescent's performance at the end of junior high-school are strongly influenced by the performance of other adolescents in the neighbourhood.
    Keywords: neighbourhood effects on education
    JEL: I21 J24
    Date: 2006–05
  15. By: Maite Blazquez (Universidad Autonoma de Madrid); Silvio Rendon (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))
    Abstract: Individuals with deficient language skills may compensate for this disadvantage in the labor market by acquiring more formal skills. Catalonia's economy is characterized by linguistic diversity and provides thereby a unique opportunity to measure the incidence of language proficiency on over-education. Catalan language, formerly confined to informal uses, became co-official with Spanish and the language of instruction in the early eighties. This change, however, did not undermine the intensive use of Castilian in most spheres of communication. Descriptive evidence seems to suggest that individuals with better language knowledge are more likely to be over-educated. This can lead us to think, as is usually the case in the public discussions, that individuals who are not fluent in the language of instruction tend to under-educate, since they are discouraged to attend school. However, once we estimate a model that controls for individuals' socio-demographic characteristics, the opposite emerges: language knowledge is shown to have in fact a negative effect on over-education. This effect, although robust to accounting for endogeneity of language knowledge and significant at the individual level, is mostly non-significant on average.
    Keywords: Over-Education, Language, Immigration, Skill Premium.
    JEL: J61 J70 J31 I20
    Date: 2006–10
  16. By: Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich); Johannes Mure (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: In a recent paper Ed Lazear (2004) proposed the so called skill-weights view of firm-specific human capital. According to his theory all single skills are general but each firm may require a different combination of these single skills. The purpose of our paper is to test Lazear`s model using a large and very detailed data set, the BIBB/IAB Qualification and Career Survey. The paper focuses on firms` investments in human capital, which according to the skill-weights approach should depend on the specificity of the firm’s skill combination, on the breadth of the skill bundle, on the thickness of the external labor market and on the probability of separation. We estimate OLS regressions and poisson regression for count data. We find that all implications are borne out in the data.
    Keywords: Skill-Weights Approach, Firm-Specific Training, Training in Germany
    JEL: M5 M12 M53
    Date: 2005–04

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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