nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2006‒12‒16
nine 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; Thai Bao Luong
  2. Human Capital Inequality, Life Expectancy and Economic Growth By Amparo Castello-Climent; Rafael Domenech
  3. The effects of higher education programme characteristics on allocation and performance of the graduates: a European view By Heijke Hans; Meng Christoph
  4. Ben-Porath meets skill-biased technical change: a theoretical analysis of rising inequality By Fatih Guvenen; Burhanettin Kuruscu
  5. Do Students Care about School Quality? Determinants of Dropout Behavior in Developing Countries By Eric A. Hanushek; Victor Lavy; Kohtaro Hitomi
  6. The rise of individual performance pay By Kvaløy, Ola; Olsen, Trond E.
  7. The Long-Term Impacts of Compulsory Schooling: evidence from a natural experiment in school leaving dates By Emilia Del Bono; Fernando Galindo-Rueda
  8. Outward investments and skill upgrading. Evidence from the Italian case By Davide Castellani; Ilaria Mariotti; Lucia Piscitello
  9. Education and Labour Market Outcomes in Sub-Saharan West Africa By Mathias Kuepie; Christophe Nordman; François Roubaud

  1. By: Cuong Le Van (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Manh-Hung Nguyen (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Thai Bao Luong (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], CEPN - Centre d'économie de l'Université de Paris Nord - [CNRS : UMR7115] - [Université Paris-Nord - Paris XIII])
    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 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 to import new technology capital and invest in the training and education of high skilled labor in the same time.
    Keywords: Optimal growth model, New technology capital, Human Capital, Developing country.
    Date: 2006–12–07
  2. By: Amparo Castello-Climent (Institute of International Economics, University of Valencia); Rafael Domenech (Institute of International Economics, University of Valencia)
    Abstract: This paper presents a model in which inequality affects per capita income when individuals decide to invest in education taking into account their life expectancy, which depends to a large extent on the human capital of their parents. Our results show the existence of multiple steady states depending on the initial distribution of education. The low steady state is a poverty trap in which children raised in poor families have low life expectancy and work as non-educated workers. The empirical evidence suggests that the life expectancy mechanism explains a major part of the relationship between inequality and human capital accumulation.
    Keywords: Life expectancy, human capital, inequality.
    JEL: J10 O10 O40
    Date: 2006–09
  3. By: Heijke Hans; Meng Christoph (ROA rm)
    Abstract: This paper provides new insight into the role of higher educational programmes in allocation and performance during the transition from education to the labour market. Using a unique data set on the labour market situation of graduates in nine European countries, we investigate the significance of five characteristics of the higher education programmes: (1) The academic versus discipline-specific character of the competencies generated by the curriculum; (2) the level of standardization of the generated competencies; (3) the extent by which working and learning activities are combined, (4) the level of internationalization of the educational programme and (5) the extent to which a programme provides exclusive entrance to particular occupations.First, our results reveal in particular the importance of the competence orientation of the education programme. Allocation of graduates to occupations takes place in a manner that yields a situation wherein the competence orientation of the education is in congruence with the competence orientation of the occupation. Second, we show that the standardization of the education programme with respect to the competencies students acquire plays an important role in both informing the employer, and reducing the adjustment costs. By that, it allows for a higher remuneration of the graduates.
    Keywords: education, training and the labour market;
    Date: 2006
  4. By: Fatih Guvenen; Burhanettin Kuruscu
    Abstract: In this paper we present an analytically tractable general equilibrium overlapping-generations model of human capital accumulation, and study its implications for the evolution of the U.S. wage distribution from 1970 to 2000. The key feature of the model, and the only source of heterogeneity, is that individuals differ in their ability to accumulate human capital. Therefore, wage inequality results only from differences in human capital accumulation. We examine the response of this model to skill-biased technical change (SBTC) theoretically. We show that in response to SBTC, the model generates behavior consistent with the U.S. data including (i) a rise in overall wage inequality in both the short run and long run, (ii) an initial fall in the education premium followed by a strong recovery, leading to a higher premium in the long run, (iii) the fact that most of this fall and rise takes place among younger workers, (iv) stagnation in median wage growth (and a slowdown in aggregate labor productivity), and (v) a rise in consumption inequality that is much smaller than the rise in wage inequality. These results suggest that the heterogeneity in the ability to accumulate human capital is an important feature for understanding the effects of SBTC, and interpreting the transformation that the U.S. economy has gone through since the 1970s.
    Date: 2006
  5. By: Eric A. Hanushek; Victor Lavy; Kohtaro Hitomi
    Abstract: School quality and grade completion by students are shown to be directly linked, leading to very different perspectives on educational policy in developing countries. Unique panel data on primary school age children in Egypt permit estimation of behavioral models of school leaving. Students perceive differences in school quality, measured as expected achievement improvements in a given school, and act on it. Specifically, holding constant the student's own ability and achievement, a student is much less likely to remain in school if attending a low quality school rather than a high quality school. This individually rationale behavior suggests that common arguments about a trade-off between quality and access to schools may misstate the real issue and lead to public investment in too little quality. Further, because of this behavioral linkage, there is an achievement bias such that common estimates of rates of return to years of school will be overstated. The paper demonstrates the analytical importance of employing output-based measures of school quality.
    JEL: H4 I2 J2 O15
    Date: 2006–12
  6. By: Kvaløy, Ola (Norsk hotellhøgskole, Institutt for økonomi og ledelse, University of Stavanger); Olsen, Trond E. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Why does individual performance pay seem to prevail in human-capital-intensive industries where teamwork is so common? We present a model that aims to explain this. In a repeated game model of relational contracting, we analyze the conditions for implementing peerdependent incentive regimes when agents possess indispensable human capital. We show that the larger the share of values that the agents can hold-up, the lower is the implementable degree of peer-dependent incentives. In a setting with team effects - complementary tasks and peer pressure, respectively - we show that while group-based incentives are optimal if agents are dispensable, it may be costly, and in fact suboptimal, to provide team incentives once the agents become indispensable.
    Keywords: Relational contracts; multiagent moral hazard; indispensable human capital
    JEL: D23 J33 L14
    Date: 2006–12–11
  7. By: Emilia Del Bono (Institute for Social and Economic Research); Fernando Galindo-Rueda (Department of Trade and Industry)
    Abstract: This paper investigates a unique feature of the English educational system to estimate the causal effect of compulsory schooling on labour market outcomes. We examine school leaving rules that allow for discrete variation in exit dates by date of birth within school cohorts. This natural experiment enables a regression discontinuity design that differences out confounding factors discussed in the literature. Individuals compelled to stay in school for as little as three months longer than their classmates tend to achieve significantly higher qualification levels and experience better labour market outcomes. Our analysis of variation of impacts by age of compulsory schooling allows us to provide valuable new insights on the role of education credentials in the labour market.
    Date: 2006–11
  8. By: Davide Castellani (University of Urbino,Italy.); Ilaria Mariotti (DIG-Polytechnic University of Milano, Italy.); Lucia Piscitello (DIG-Polytechnic University of Milano, Italy.)
    Abstract: The present paper investigates the effect of outward investments by Italian manufacturing firms on the domestic employment level and on its skill composition, as measured by the increase in the aggregate share of skilled workers (managers and clerks) in total employment. In doing so, the paper extends the existing empirical literature on the Italian case that has so far provided evidence on the changes in the employment intensity but not on the composition of the domestic employment. We carry out an analysis at the firm level based on the the behaviour of 108 Italian firms, which became multinational for the first time in 1998-2003, investing in either developed countries, CEECs or other developing economies, compared with the behaviour of a counterfactual group of firms constituted by 2,500 national firms that never invested abroad in the considered period. The econometric analysis supports that the internationalisation of activities by manufacturing firms does not reduce their domestic employment, independently of the destination of the investment, and that it may change the division of labour within the firm, thus leading to a higher share of skilled labour intensive activities, especially as a result of investments in CEECs.
    Keywords: Foreign direct investment, Employment, Skill-upgrading.
    JEL: F2 J21
    Date: 2006–11
  9. By: Mathias Kuepie (DIAL,CEPS/INSTEAD); Christophe Nordman (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) The purpose of this paper is to study the effects of education on urban labour market participation and earnings in seven major West African cities. Our results show that although education does not always guard against unemployment, it does increase individual earnings in Abidjan, Bamako, Cotonou, Dakar, Lome, Niamey and Ouagadougou and opens the door to get into the most profitable niches, which are found in the formal private and public sectors. We shed light on convex returns to education in all the cities considered. Besides, not controlling for the endogeneity of education leads to biased estimated returns (either upward or downward depending on the city) which stresses the complexity of the mechanisms linking education and earnings across cities and sectors. We also bring some support to the idea according to which social capital may largely be at work in this relationship. Finally, a major contribution of this paper is to provide evidence of significant effects of education on individual earnings in the informal sectors of the major WAEMU cities, even at high levels of schooling. _________________________________ (français) L'objectif de ce papier est d’étudier les effets de l’éducation sur la participation au marché du travail urbain et la rémunération du travail dans sept capitales d’Afrique de l’Ouest francophones. Nous montrons que si l’éducation ne constitue pas toujours un rempart contre le chômage, elle est un facteur incontestable d’accroissement des gains sur les marchés du travail d’Abidjan, Bamako, Cotonou, Dakar, Lomé, Niamey et Ouagadougou. Elle permet notamment aux individus les mieux dotés de s’insérer dans les créneaux les plus rentables à savoir les secteurs formels privé et public. Les rendements marginaux de l’éducation estimés sont convexes dans toutes les villes considérées. Nous montrons également que ne pas prendre en compte l’endogénéité supposée de la variable d’éducation dans les fonctions de gains conduit à surestimer ou à sous-estimer les rendements de l’éducation suivant les cas. Ce résultat rend compte de la complexité du lien entre éducation et revenus en fonction de la ville et du secteur d’affiliation des individus. De plus, nos estimations corroborent l’idée selon laquelle le capital social des travailleurs interférerait de façon significative dans ce mécanisme. Finalement, l’apport de notre étude est aussi de montrer que le capital éducatif, y compris à des niveaux élevés, permet un accroissement substantiel des gains dans le secteur informel de la plupart de ces grandes villes de l’UEMOA.
    Keywords: Returns to education, earnings, endogeneity, selectivity, informal sector, Sub-Saharan West Africa, Rendements de l’éducation, revenus, endogénéité, effet de sélection, secteur informel, Afrique de l’Ouest.
    JEL: J24 J31 O12
    Date: 2006–11

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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