nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒12‒09
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 Daniele Checchi; Giorgio Brunello
  2. Human Capital, Fertility and Growth By Oded Galor
  3. Population Aging and Continued Education By Regina T. Riphahn; Parvati Trübswetter
  4. Over-Education and the Skills of UK Graduates By Arnaud Chevalier; Joanne Lindley
  5. Heterogeneous Human Capital and Migration: Who Migrates from Mexico to the US? By Vincenzo Caponi
  6. Brain Drain and Inequality Across Nations By Frédéric Docquier
  7. Human Capital and Wages in Exporting Firms By Jakob Roland Munch; Jan Rose Skaksen
  8. Returns to Schooling in Kazakhstan: OLS and Instrumental Variables Approach By G. Reza Arabsheibani; Altay Mussurov
  9. Educational policy and intergenerational income mobility: evidence from the Finnish comprehensive school reform By Pekkarinen, Tuomas; Pekkala, Sari; Uusitalo, Roope
  10. Staying on the Dole By Strulik, Holger; Tyran, Jean-Robert; Vanini, Paolo
  11. Optimal Welfare-to-Work Programs By Pavoni, Nicola; Violante, Giovanni L
  12. The Aggregate Labour Market Effects of the Swedish Knowledge Lift Program By Albrecht, James; van den Berg, Gerard J; Vroman, Susan
  13. Estimating the Return to Endogenous Schooling Decisions for Australian Workers via Conditional Second Moments By Roger Klein; Francis Vella
  14. Intergenerational Transmission of Abilities and Self Selection of Mexican Immigrants By Vincenzo Caponi
  15. Employability Skills Initiatives in Higher Education: What Effects Do They Have On Graduate Labour Market Outcomes? By Geoff Mason; Williams, G., Cranmer, S.
  16. Estimates of the Effect of Parents’ Schooling on Children’s Schooling Using Censored and Uncensored Samples By Monique de Haan; Erik Plug

  1. By: Daniele Checchi (University of Milan); Giorgio Brunello
    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, training, literacy,
    Date: 2006–11–17
  2. By: Oded Galor
    Date: 2006
  3. By: Regina T. Riphahn (University of Erlangen-Nuremberg and IZA Bonn); Parvati Trübswetter (University of Erlangen-Nuremberg)
    Abstract: This study investigates whether the incidence of continued vocational education has changed as the German workforce commenced an aging process which is expected to intensify. As the lifespan in productive employment, lengthens human capital investments for older workers become increasingly worthwhile. Using the data of a German population survey we describe recent trends in the development of human capital investments and apply decomposition procedures to the probability of continued education. Holding everything else constant the shift in the population age distribution by itself would have led to a decline in training participation over the considered period, 1996-2004. However, the decomposition analyses yield that behavioral changes caused an increase in training particularly among older workers.
    Keywords: specific human capital investment, training, population aging, demographic change
    JEL: J24 J10 M53
    Date: 2006–11
  4. By: Arnaud Chevalier (Royal Holloway University of London, London School of Economics, University College Dublin and IZA Bonn); Joanne Lindley (University of Sheffield)
    Abstract: During the early Nineties the proportion of UK graduates doubled over a very short period of time. This paper investigates the effect of the expansion on early labour market attainment, focusing on over-education. We define over-education by combining occupation codes and a self-reported measure for the appropriateness of the match between qualification and the job. We therefore define three groups of graduates: matched, apparently over-educated and genuinely over-educated; to compare pre- and post-expansion cohorts of graduates. We find the proportion of over-educated graduates has doubled, even though over-education wage penalties have remained stable. This suggests that the labour market accommodated most of the large expansion of university graduates. Apparently over-educated graduates are mostly undistinguishable from matched graduates, while genuinely over-educated graduates principally lack non-academic skills such as management and leadership. Additionally, genuine over-education increases unemployment by three months but has no impact of the number of jobs held. Individual unobserved heterogeneity differs between the three groups of graduates but controlling for it, does not alter these conclusions.
    Keywords: over-education, skills
    JEL: J24 J31 I2
    Date: 2006–11
  5. By: Vincenzo Caponi (Ryerson University and IZA Bonn)
    Abstract: In this paper I document the fact that the relationship between human capital, as measured by education, and migration choices among Mexicans is U-shaped: the highest and lowest educated tend to migrate more than the middle educated. I provide an explanation for the Ushaped relationship based on the interaction of two forces. On the one hand, there is a loss of human capital faced by emigrants, due to imperfect transferability, that is progressive with education and causes the negative relationship. On the other hand, the altruism towards future generations and the transmission of human capital from one generation to the next drives the positive relationship. I calibrate the model to match relevant moments from the Mexican and US Censuses, and use the calibrated model for policy evaluation. I evaluate the long run effect of the Progresa policy on education and migration. I show that, by giving a monetary contribution to poor families that send their children to school at lower grades, the Mexican government will improve the educational distribution of future generations and this in turn will shift the composition of immigrants towards the higher educated. Overall it will lower emigration from Mexico attenuating the pressure, especially of illegal immigrants.
    Keywords: migration, Mexico, heterogeneous human capital, Progresa
    JEL: F22 J61 O15
    Date: 2006–11
  6. By: Frédéric Docquier (FNRS, IRES, Université Catholique de Louvain and IZA Bonn)
    Abstract: Is the brain drain a curse or a boon for developing countries? This paper reviews what is known to date about the magnitude of the brain drain from developing to developed countries, its determinants and the way it affects the well-being of those left behind. First, I present alternative measures of the brain drain and characterize its evolution over the last 25 years. Then, I review the theoretical and empirical literature. Although the brain drain is a major source of concern for origin countries, it also induces positive effects through various channels such as remittances, return migration, diaspora externalities, quality of governance and increasing return to education. Whilst many scientists and international institutions praise the unambiguous benefits of unskilled migration for developing countries, my analysis suggests that a limited but positive skilled emigration rate (say between 5 and 10 percent) can also be good for development. Nevertheless, the current spatial distribution of the brain drain is such that many poor countries are well above this level, such as sub-Saharan African and Central American countries.
    Keywords: F22, J61
    Date: 2006–11
  7. By: Jakob Roland Munch (University of Copenhagen, CEBR and EPRU); Jan Rose Skaksen (Copenhagen Business School, CEBR and IZA Bonn)
    Abstract: This paper studies the link between a firm’s 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
  8. By: G. Reza Arabsheibani (University of Wales Swansea, WELMERC and IZA Bonn); Altay Mussurov (KIMEP)
    Abstract: This paper examines rates of return to schooling in Kazakhstan using OLS and instrumental variable (IV) methodologies. We use spouse’s education and smoking as instruments. We find that spouse’s education is a valid instrument and that conventional OLS estimates that assume the exogenous nature of schooling, and hence do not control for endogeneity bias, may underestimate the true rates of return. The results indicate that the returns to schooling in Kazakhstan have increased with transition. This may reflect the relative scarcities of highly educated people in Kazakhstan with human capital that employers require and, following the market reforms, reward accordingly.
    Keywords: human capital, instrumental variables, rate of return to education
    JEL: C13 I21 J24
    Date: 2006–11
  9. By: Pekkarinen, Tuomas (IFAU - Institute for Labour Market Policy Evaluation); Pekkala, Sari (Charles River Associates International); Uusitalo, Roope (Helsinki School of Economics)
    Abstract: This paper estimates the effect of a major education reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the intergenerational income elasticity using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across country during a six-year period. The results indicate that the reform reduced the intergenerational income elasticity by about seven percentage points.
    Keywords: Intergenerational mobility; education; comprehensive school reform
    JEL: I20 J62
    Date: 2006–11–11
  10. By: Strulik, Holger; Tyran, Jean-Robert; Vanini, Paolo
    Abstract: We develop a simple model of short- and long-term unemployment to study how labour market institutions interact with labour market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labour market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.
    Keywords: present-biased preferences; retraining; skill degradation; unemployment; unemployment benefits; welfare assistance
    JEL: J31 J38 J64
    Date: 2006–11
  11. By: Pavoni, Nicola; Violante, Giovanni L
    Abstract: A Welfare-to-Work (WTW) program is a mix of government expenditures on various labor market policies targeted to the unemployed (e.g., unemployment insurance, job search monitoring, social assistance, wage subsidies). This paper provides a dynamic principal-agent framework suitable for analyzing chief features of an optimal WTW program such as the sequence and duration of the different policies, the dynamic pattern of payments along the unemployment spell, and the emergence of taxes/subsidies upon re-employment. The optimal program endogenously generates an absorbing policy of last resort ('social assistance') characterized by a constant lifetime payment and no active participation by the agent. Human capital depreciation is a necessary condition for policy transitions to be part of an optimal WTW program. The typical sequence of policies is quite simple: the program starts with standard unemployment insurance, then switches into monitored search and, finally, into social assistance. The optimal benefits are decreasing during unemployment insurance and constant during both job search monitoring and social assistance. Whereas taxes (subsidies) can be either increasing or decreasing with duration during unemployment insurance, they must decrease (increase) during a phase of job search monitoring. In a calibration exercise, we use our model to analyze quantitatively the features of the optimal program for the U.S. economy. With respect to the existing U.S. system, the optimal WTW scheme delivers sizeable welfare gains to unskilled workers because the incentives to search for a job can be retained even while delivering more insurance, and using costly monitoring less intensively.
    Keywords: human capital; job search monitoring; recursive contracts; unemployment insurance; welfare-to-work
    JEL: D82 H21 J24 J64 J65
    Date: 2006–11
  12. By: Albrecht, James; van den Berg, Gerard J; Vroman, Susan
    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 low-skill workers. This paper evaluates the potential effects of this program on aggregate labour 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 labour market outcomes after termination of the program.
    Keywords: calibration; job search; program evaluation; returns to education; Swedish labour market; unemployment; wages
    JEL: C31 D83 J21 J24 J31 J64
    Date: 2006–11
  13. By: Roger Klein (Rutgers University); Francis Vella (Georgetown University and IZA Bonn)
    Abstract: This paper employs conditional second moments to identify the impact of education in wage regressions where education is treated as endogenous. This approach avoids the use of instrumental variables in a setting where instruments are frequently not available. We employ this methodology to estimate the returns to schooling for a sample of Australian workers. We find that accounting for the endogeneity of education in this manner increases the estimated return to education from 6 percent to 10 percent.
    Keywords: returns to schooling, endogeneity, heteroskedasticity
    JEL: J2 C31
    Date: 2006–10
  14. By: Vincenzo Caponi (Ryerson University and IZA Bonn)
    Abstract: Building on Borjas (1993) I develop an intergenerational model of self-selection of migration and education that allows for a complex selection mechanism. In particular, it allows for the possibility that agents are selected differently depending on the schooling level they choose. As in Mayer (2005) I assume that agents are endowed with two abilities, manual and intellectual, and use the intergenerational structure of the model to infer potential earnings of a person for different levels of education and in different countries. This makes it possible to quantify the self selection bias of estimates of the return to education and migration. The model is estimated using data on Mexicans in the US from the CPS and on Mexicans residents in Mexico from the Mexican census. The findings are that there is a significant loss of human capital faced by immigrants that is not transmitted to their children. While immigrants are observed to earn less because they find it difficult to adapt their skills to the host country, their children earn more because they can inherit all the abilities of their parents, including that part that could not be used for producing earnings. Moreover, in the case of immigrants, parents with larger amounts of intellectual ability migrate more and tend to choose to remain high school educated. However, they migrate with the expectation of their children becoming college educated. Therefore, measures that rely on the earnings performance and educational attainment of immigrants underestimate the amount of human capital they bring into the host country.
    Keywords: international migration, human capital, self selection, intergenerational mobility
    JEL: F22 J24 J61
    Date: 2006–11
  15. By: Geoff Mason; Williams, G., Cranmer, S.
    Abstract: This paper makes use of detailed information gathered at university department level, combined with graduate survey data, to assess the impact of different kinds of employability skills initiative on graduate labour market performance. We find that structured work experience has clear positive effects on the ability of graduates, firstly, to find employment within six months of graduation and, secondly, to secure employment in ‘graduate-level’ jobs. The latter job quality measure is also positively associated with employer involvement in degree course design and delivery. However, a measure of departmental involvement in explicit teaching and assessment of employability skills is not significantly related to labour market outcomes.
    Date: 2006–09
  16. By: Monique de Haan (SCHOLAR, University of Amsterdam); Erik Plug (SCHOLAR, University of Amsterdam, Tinbergen Institute and IZA Bonn)
    Abstract: In this paper we estimate the impact of parental schooling on child schooling, focus on the problem that children who are still in school constitute censored observations, and evaluate three solutions to it: maximum likelihood approach, replacement of observed with expected years of schooling, and elimination of all school-aged children. Plug (2004) - a recent mobility study that relies on censored data - serves as an illustration. With updated and uncensored versions of previous samples, we re-examine Plug’s estimates and test how the three correction methods deal with censored observations. The one that treats parental expectations as if they were realizations seems to fix the censoring problem quite well.
    Keywords: intergenerational mobility of education, censored observations
    JEL: I2 J62 C34
    Date: 2006–11

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