nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒11‒25
fifteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. New technology, human capital and growth for developing countries. By Cuong Le Van; Manh-Hung Nguyen; Laurent Thai Bao Luong
  2. A Dynamic Analysis of Educational Attainment, Occupational Choices, and Job Search By Sullivan, Paul
  3. The Entrepreneur’s Mode of Entry: Business Takeover or New Venture Start By Simon C. Parker; C. Mirjam van Praag
  4. Empirical Evidence on Occupation and Industry Specific Human Capital By Sullivan, Paul
  5. Training and Economic Density: Some Evidence from Italian Provinces By Giorgio Brunello; Maria De Paola
  6. The Aggregate Labor Market Effects of the Swedish Knowledge Lift Program By James Albrecht; Gerard J. van den Berg; Susan Vroman
  7. What Determines Adult Cognitive Skills? Impacts of Pre-Schooling, Schooling and Post-Schooling Experiences in Guatemala By John Maluccio; John Hoddinott, International Food Policy Research Institute; Jere R. Behrman, University of Pennsylvania; Reynaldo Martorell, Emory University; Erica Soler-Hampejsek, University of Pennsylvania; Aryeh D. Stein, Emory University; Emily L. Behrman, University of Pennsylvania; Manuel Ramirez-Zea, Institute of Nutrition for Central America and Panama
  8. Educational Effects of Alternative Secondary School Tracking Regimes in Germany By Andrea M. Weber
  9. Educational Mismatch Among Ph.D.s: Determinants and Consequences By Keith A. Bender; John S. Heywood
  10. The Migration and FDI Puzzle: Complements or Substitutes? By Elena D'Agosto; Nazaria Solferino; Giovanni Tria
  11. Skill diffusion by temporary migration? Returns to Western European working experience in the EU-accession countries By Anna Iara
  12. Education and Self-Employment: Changes in Earnings and Wealth Inequality By Yaz Terajima
  13. The Evolution of Work By Markus Mobius; Raphael Schoenle
  14. Can Risk Aversion Explain Schooling Attainments? Evidence From Italy By Christian Belzil; Marco Leonardi
  15. Economic centrality, per capita income and human capital – some results at regional level By Nuno Crespo; Maria Paula Fontoura

  1. By: Cuong Le Van (Centre d'Economie de la Sorbonne); Manh-Hung Nguyen (Centre d'Economie de la Sorbonne); Laurent Thai Bao Luong (CEPN, Université Paris 13)
    Abstract: We consider a developing country with three sectors in economy : consumption goods, new technology and education. Productivity of the consumption goods sector depends on new technology and skilled labor used for production of the new technology. We show that there might be three stages in the process of economic growth. In the first stage the country concentrates on production of consumption goods ; in the second stage it requires the country to import both physical capital to produce consumption goods and new technology capital to produce new technology ; and finally, the last stage is one where the country needs, additionally to investment activities in the previous stage, to invest the training and education of high skilled labor.
    Keywords: Optimal growth model, new technology capital, human capital, developing country.
    JEL: D51 E13
    Date: 2006–10
  2. By: Sullivan, Paul
    Abstract: This paper examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices. Individuals in the model decide when to attend school and when to move between firms and occupations over the course of their career. Workers search for suitable wage and non-pecuniary match values at firms across occupations given their heterogeneous skill endowments and preferences for employment in each occupation. Over the course of their careers workers endogenously accumulate firm and occupation specific human capital that affects wages differently across occupations. The parameters of the model are estimated with simulated maximum likelihood using data from the 1979 cohort of the National Longitudinal Survey of Youth. The structural parameter estimates reveal that both self-selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital. Eliminating the gains from matching between workers and occupations would reduce total wages by 30%, eliminating the gains from job search would reduce wages by 19%, and eliminating the effects of firm and occupation specific human capital on wages would reduce wages by only 2.7%.
    Keywords: occupational choice; job search; human capital; dynamic programming models
    JEL: I21 J62 J24
    Date: 2006–09
  3. By: Simon C. Parker (Durham University and IZA Bonn); C. Mirjam van Praag (University of Amsterdam and IZA Bonn)
    Abstract: We analyse the decision to become an entrepreneur by either taking over an established business or starting a new venture from scratch. A model is developed which predicts how several individual- and firm-specific characteristics influence entrepreneurs’ entry mode. The new venture creation mode is associated with higher levels of schooling and wealth, whereas managerial experience, new venture start-up capital requirements and risk promote the takeover mode. Entrepreneurs whose parents run a family firm are predicted to invest the least in schooling, since schooling reduces search costs and these individuals have the lowest probability of needing to search for a business opportunity outside their family. A sample of data on entrepreneurs from the Netherlands provides broad support for the theory; implications for policy-makers concerned about the survival of family firms lacking withinfamily successors are discussed.
    Keywords: entrepreneurship, business entry, venture start-up, business takeover, human capital
    JEL: J24 M13
    Date: 2006–10
  4. By: Sullivan, Paul
    Abstract: This paper presents instrumental variables estimates of the effects of firm tenure, occupation specific work experience, industry specific work experience, and general work experience on wages using data from the 1979 Cohort of the National Longitudinal Survey of Youth. A key feature of the empirical work presented in this paper is that the returns to human capital are allowed to vary across occupations, in contrast to existing research which has constrained the parameters of the wage equation to be the same across occupations. The estimates indicate that both occupation and industry specific human capital are key determinants of wages, and the importance of various types of human capital varies widely across one-digit occupations. Human capital is primarily occupation specific in occupations such as craftsmen, where workers realize a 14% increase in wages after five years of occupation specific experience but do not realize wage gains from industry specific experience. In contrast, human capital is primarily industry specific in other occupations such as managerial employment where workers realize a 23% wage increase after five years of industry specific work experience. In other occupations, such as professional employment, both occupation and industry specific human capital are key determinants of wages.
    Keywords: occupation specific human capital; industry specific human capital; specificity of human capital; wage growth
    JEL: J31 J24
    Date: 2006–10
  5. By: Giorgio Brunello (University of Padua); Maria De Paola (University of Calabria)
    Abstract: In this paper we use a search and matching model to investigate the economic relationship between training and local economic conditions. We identify two aspects of this relationship going in opposite directions: on the one hand, the complementarity between local knowledge spillovers and training generates a positive correlation between training and local density; on the other hand, higher wages and labor turnover in denser areas reduce training. Overall the relationship can be either positive or negative, depending on the relative strength of these two effects. Our empirical analysis, based on a sample of Italian firms, shows that training is lower in provinces with higher labor market density, measured as the number of employees per squared kilometer.
    Keywords: training, local labor markets, Italy
    JEL: J24 R12
    Date: 2006–11
  6. By: James Albrecht (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn); Gerard J. van den Berg (Free University Amsterdam, IFAU Uppsala, CEPR, IFS and IZA Bonn); Susan Vroman (Georgetown University, IFAU Uppsala, CESifo and IZA Bonn)
    Abstract: The Swedish adult education program known as the Knowledge Lift (1997-2002) was unprecedented in its size and scope, aiming to raise the skill level of large numbers of lowskill workers. This paper evaluates the potential effects of this program on aggregate labor market outcomes. This is done by calibrating an equilibrium search model with heterogeneous worker skills using pre-program data and then forecasting the program impacts. We compare the forecasts to observed aggregate labor market outcomes after termination of the program.
    Keywords: job search, returns to education, program evaluation, wages, unemployment, Swedish labor market, calibration
    JEL: J21 J64 J31 J24 I21 C31
    Date: 2006–10
  7. By: John Maluccio; John Hoddinott, International Food Policy Research Institute; Jere R. Behrman, University of Pennsylvania; Reynaldo Martorell, Emory University; Erica Soler-Hampejsek, University of Pennsylvania; Aryeh D. Stein, Emory University; Emily L. Behrman, University of Pennsylvania; Manuel Ramirez-Zea, Institute of Nutrition for Central America and Panama
    Abstract: Most investigations of the importance of and the determinants of adult cognitive skills assume that (a) they are produced primarily by schooling and (b) schooling is statistically predetermined. But these assumptions may lead to misleading inferences about impacts of schooling and of pre-schooling and post-schooling experiences on adult cognitive skills. This study uses an unusually rich longitudinal data set collected over 35 years in Guatemala to investigate production functions for adult (i) reading-comprehension and (ii) nonverbal cognitive skills as dependent on behaviorally-determined pre-schooling, schooling and post-schooling experiences. Major results are: (1) Schooling has significant and substantial impact on adult reading comprehension (but not on adult nonverbal cognitive skills)—but estimates of this impact are biased upwards substantially if there are no controls for behavioral determinants of schooling in the presence of persistent unobserved factors such as genetic endowments and/or if family background factors that appear to be correlated with genetic endowments are included among the first-stage instruments. (2) Both pre-schooling and post-schooling experiences have substantial significant impacts on one or both of the adult cognitive skill measures that tend to be underestimated if these pre- and post-schooling experiences are treated as statistically predetermined—in contrast to the upward bias for schooling, which suggests that the underlying physical and job-related components of genetic endowments are negatively correlated with those for cognitive skills. (3) The failure in most studies to incorporate pre- and post-schooling experiences in the analysis of adult cognitive skills or outcomes affected by adult cognitive skills is likely to lead to misleading over-emphasis on schooling relative to these pre-and post-schooling experiences. (4) Gender differences in the coefficients of the adult cognitive skills production functions are not significant, suggesting that most of the fairly substantial differences in adult cognitive skills favoring males on average originate from gender differences in schooling attainment and in experience in skilled jobs favoring males. These four sets of findings are of substantial interest in themselves. But they also have important implications for broader literatures, reinforcing the importance of early life investments in disadvantaged children in determining adult skills and options, pointing to limitations in the cross-country growth literature of using schooling of adults to represent human capital, supporting hypotheses about the importance of childhood nutrition and work complexity in explaining the “Flynn effect” of substantial increases in measured cognitive skills over time, and questioning the interpretation of studies that report productivity impacts of cognitive skills without controlling for the endogeneity of such skills.
    Date: 2006
  8. By: Andrea M. Weber (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology))
    Abstract: This paper examines educational outcomes of pupils selected to secondary school types by different tracking regimes in a German state: The traditional regime of streaming pupils after fourth grade of elementary school is compared to a regime in which pupils are selected into different secondary school tracks after sixth grade. Descriptive evidence demonstrates that the proportion of pupils reaching the highest level of secondary education is relatively small for those who attended later tracking schools. Additionally, the incidence of track modification is relatively frequent for schools with a high proportion of incoming pupils from the later tracking regime. However, less favorable educational outcomes of the later tracking schools are due to self-selection of relative low performers into these schools: The downward bias in estimating tracking regime effects is reduced considerably by controlling for a broad variety of socio-economic background characteristics. Corresponding regression results mainly indicate that there are no negative effects of later tracking on observed educational outcomes measured in the middle of secondary school. Regression analyses for different sub-groups suggest that the reading performance of immigrant pupils is better under the later tracking regime compared to the early tracking system.
    Keywords: education, segregation, streaming, tracking, identification, immigration
    JEL: I21 I28
    Date: 2006–11
  9. By: Keith A. Bender; John S. Heywood
    Abstract: Using the Survey of Doctoral Recipients, the magnitude and consequences of job mismatch are estimated for Ph.D.s in science. Approximately one-sixth of academics and nearly one-half of nonacademics report some degree of mismatch. The influence of job mismatch is estimated for three job outcomes: earnings, job satisfaction and turnover. Surprisingly large and robust influences emerge. Mismatch is associated with substantially lower earnings, lower job satisfaction and a higher rate of turnover. These results persist across a variety of specifications and hold for both academics and nonacademics. Estimates of the determinants of mismatch indicate that older workers and those in rapidly changing disciplines are more likely to be mismatched and there is a suggestion that women are more likely to be mismatched.
    JEL: J24 J28 J44
    Date: 2006–11
  10. By: Elena D'Agosto (Economics Department - University of Rome "Tor Vergata"); Nazaria Solferino (Economics Department - University of Milan "Bicocca"); Giovanni Tria (Economics Department - University of Rome "Tor Vergata")
    Abstract: This paper analyses the link between FDI inflows and migration waves from developing countries. In addition, it investigates mechanisms through which this link works. Empirical results indicate that FDI can be seen as substitutes of migration through direct and indirect labour demand. However, the paper demonstrates that a positive relationship (complementarity effect) between FDI and migration flows takes place. In longi-tudinal analysis results indicate that the complementarity effect prevails. In cross section analysis, estimating a two equation models, we find that a substitutability effect is at work through the impact of FDI on human capital accumulation but the direct complementarity effect also prevails.
    Keywords: International Migration, Human Capital, FDI
    JEL: F22 J24 F21
    Date: 2006–10–25
  11. By: Anna Iara (The Vienna Institute of International Economic Studies (wiiw))
    Abstract: Temporary migration is of growing significance in Europe. Upon migration to a country with higher technological development that typically coincides with positive wage differentials, temporary migrants may upgrade their skills by learning on the job and subsequently import the newly acquired human capital to their source country, thus adding to international know-how diffusion and the catching up of the respective economy. This paper is the first to provide supportive evidence of this hypothesis in a cross-country East to West European perspective, using the 2003 Youth Eurobarometer dataset.
    Keywords: Central and Eastern Europe, return migration, wage premium, skill diffusion
    JEL: J61 J31 O15
    Date: 2006–08–30
  12. By: Yaz Terajima
    Abstract: The author quantitatively studies the interaction between education and occupation choices and its implication for the relationship between the changes in earnings inequality and the changes in wealth inequality in the United States over the 1983–2001 period. Among households whose head is a college graduate, the ratio of average household earnings between the self-employed and workers increased by 57 per cent. At the same time, the ratio of the average household wealth increased by 137 per cent. These findings suggest that both earnings and wealth inequality increased over this period. Did this change in relative average earnings lead to the change in relative average wealth? The author builds on a model of wealth distribution to include education and occupation choices, where earnings opportunities are dictated by productivity processes that are education-occupation specific. By calibrating these productivity processes to match the earnings observations separately for 1983 and 2001, the author quantitatively derives the model-implied changes in wealth inequality between different education-occupation groups of households. The results show that this exercise leads to one-third of the change in the relative average wealth between college self-employed and college worker households.
    Keywords: Economic models; Labour markets
    JEL: D31 I21 J23
    Date: 2006
  13. By: Markus Mobius; Raphael Schoenle
    Abstract: The division of labor first increased during industrialization and then decreased again after 1970 as job roles have expanded. We explain these trends in the organization of work through a simple model where (a) machines require standardization to exploit economies of scale and (b) more customized products are subject to trends and fashions which make production tasks less predictable and a strict division of labor impractical. At the onset of industrialization, the market supports only a small number of generic varieties which can be mass-produced under a strict division of labor. Thanks to productivity growth, niche markets gradually expand, producers eventually move into customized production and the division of labor decreases again. The model predicts capital-skill substitutability during industrialization and capital skill complementarity in the maturing industrial economy. Moreover, conventional calculations of the factor content of trade underestimate the impact of globalization because they do not take into account changes in product market competition induced by trade. We test our model by exploiting the time-lags in the introduction of bar-coding in three-digit SIC manufacturing industries in the US. We find that both increases in investments in computers and bar-coding have led to skill-upgrading. However, consistent with our model bar-coding has affected mainly the center of the skill distribution by shifting demand away from the high-school educated to the less-than-college educated.
    JEL: J24 L23 O31 O33
    Date: 2006–11
  14. By: Christian Belzil (GATE CNRS); Marco Leonardi (Università di Milano)
    Abstract: Using unique Italian panel data, in which individual differences in behavior toward risk are measured from answers to a lottery question, we investigate if (and to what extent) risk aversion can explain differences in schooling attainments. We formulate the schooling decision process as a reduced-form dynamic discrete choice. The model is estimated with a degree of flexibility virtually compatible with semiparametric likelihood techniques. We analyze how grade transition from one level to the next varies with preference heterogeneity (risk aversion), parental human capital, socioeconomic variables and persistent unobserved (to the econometrician) heterogeneity. We present evidence that schooling attainments decrease with risk aversion, but despite a statistically significant effect, differences in attitudes toward risk account for a modest portion of the probability of entering higher education. Differences in ability(ies) and in parental human capital are much more important. in the most general version of the model, the likelihood function is the joint probability of schooling attainments, and post-schooling wealth and risk aversion.
    Keywords: dynamic discrete choices, éducation, human capital, risk aversion
    JEL: J24
    Date: 2006–10
  15. By: Nuno Crespo; Maria Paula Fontoura
    Abstract: It has been shown that countries located further from global economic activity will have lower levels of per capita income and human capital. We evaluate, for the Portuguese case, the validity of the positive relationship of economic centrality with per capita income and with human capital at the regional level (275 regions). Results show that more central regions - in terms of proximity to the location of the economic activity - appear to have higher levels of per capita income and human capital. Some regions suffer a permanent penalty resulting from their disadvantage as regards the relative geographical position.
    Keywords: economic centrality; economic geography; income per capita; human capital.
    JEL: O10 O18

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