nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2007‒01‒14
sixteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Investments in Higher Education and the Economic Performance of OECD Member Countries By Amnon Frenkel; Eran Leck
  2. Education and Income Dynamics in Urban and Regional Labour Market Mobility By Lasse Sigbjorn Stambol
  3. Education and Income Inequality in the Regions of the European Union By Andres Rodriguez-Pose; Vasileios Tselios
  4. Education and Inequality: Evidence from Spain By Budria, Santiago
  5. Returns to Education and Human Capital Depreciation in Spain. By Ines P. Murillo
  6. Human Capital and Growth of High- and Low-Skilled Jobs in Cities By Jens Suedekum
  7. Education and crime: evidence from Italian regions By Paolo Buonanno; Leone Leonida
  8. Education and Wage Inequality in Portugal By Budria, Santiago; Nunes, Celso
  9. Crime and labour market opportunities in Italy (1993-2002) By Paolo Buonanno
  10. Efficiency and Productivity in Finnish Comprehensive Schooling 1998-2004 By Juho Aaltonen; Tanja Kirjavainen; Antti Moisio
  11. A Versus K Revisited: Evidence from Selected MENA Countries By Aamer Abu-Qarn; Suleiman Abu-Bader
  12. Firm characteristics, labor sorting, and wages By Alcala, Francisco; Hernandez, Pedro J.
  13. Skilled migration and growth. Testing brain drain and brain gain theories By José Luis Groizard; Joan Llull
  14. Intergenerational Transmission of Human Capital in Brazil: Differences According to Race and Region By Antonio Carlos Campino; F.M.S. Machado
  15. The impact of young motherhood on education, employment and marriage By Bradbury, Bruce

  1. By: Amnon Frenkel; Eran Leck
    Abstract: Universities and academic research institutions play an important role in contributing to the economic growth of countries, mainly through the diffusion of scientific knowledge, new methods, and technologies. This study investigates the relationship between investments in higher education and the economic performance of developed countries. Cross-sectional data, relating to higher education, workforce composition, and macro-economic indicators, were analyzed. The empirical analysis was based on data gathered from international datasets: World Development Indicators (WDI) of the World Bank, OECD Statistics Portal, and UNSECO for the 30 OECD member states. The main research hypothesis was that a positive and significant linkage exists between investment in higher education and economic growth. The examination was carried out by employing two models. The first model (a two-stage model) assumed that an indirect link existed between higher education and economic growth. The instrumental indicator used in the analysis was the country’s labor force composition (specifically, the percentage of employees in scientific and engineering fields). The second model employed a multivariate regression model to directly test the relationship between higher education and growth indicators. The research findings show that higher education inputs translate into human capital outputs (a trained workforce in the computing, science, and engineering fields), and these transform back into the inputs that explain the economic performance of OECD countries. Smaller European countries, such as Finland, the Netherlands, and Denmark, are more efficient in translating their educational investments into a high-quality labor force. The two main activities of universities - teaching and research - were found to be connected to enhancing the per capita GDP of OECD countries. The research findings also support evidence from other studies that show decreasing returns to scale in education. The elasticity of per capita GDP with respect to R&D expenditure per student and the expenditure on teaching in research universities were found to be fairly large, with a constant elasticity of 0.78% and point elasticities (when expenditure on teaching is held constant) ranging from 0.04% (Turkey) to 0.84% (Sweden). Point elasticities for the majority of OECD countries were found to be at the 0.2%-0.5% level.
    Date: 2006–08
  2. By: Lasse Sigbjorn Stambol
    Abstract: Well-functioning local labour markets are expected to become net receivers of labour from other regions. In addition these regions are also expected to attract the most qualified labour and thus be the winners in the competition for the best human capital. For an examination of the two concepts "brain-gain" (a relative gain of qualified persons) and "brain-drain" (a relative loss of qualified persons), we do introduce a concept of average education based on the number of years each person have been in education altogether. There are thus reasons to expect that the regions with the highest net in-migration to job also benefit from a "brain-gain" through the migration process and vice-versa that regions experiencing a strong net loss through the migration process also suffer from a "brain-drain" in this respect. Some regions may, however, compensate a negative net-migration with a "brain-gain" through the migration process, whilst some regions may experience a "brain-drain" through migration in spite of positive net in-migration. The "brain-gain", "brain-drain" approach poses also important questions in terms of intra- and interregional competitiveness of human capital across the different industrial sectors, which is also taken into consideration in the analysis. We have as well put forward hypotheses expecting that employed persons that add to their highest formal education another year of formal education will also raise their income above the average increase of income. On the other hand the most qualified labour expects to achieve as much return on their human capital investment as possible, pushing their careers in direction of those regions and those sectors of the economy that actually give the best return. The final section of the paper is thus stressing two main aspects of these topics, first analysing the relative rise of income among employed persons changing their educational level, and second analysing the return to human capital by help of changes in personal income in different person groups by industrial sectors and regional typologies.
    Date: 2006–08
  3. By: Andres Rodriguez-Pose; Vasileios Tselios
    Abstract: The paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel data set for 102 regions over the period 1995-2000, it analyses how microeconomic changes in human capital distribution affect income inequality. Human capital distribution is measured in terms of both human capital stock, as well as human capital inequality. Income and human capital inequalities are calculated by a generalised entropy index (Theil index). Different static and dynamic panel data analyses are conducted in order to reduce measurement error on inequalities and minimise potential problems of omitted-variable bias. The regression results suggest that, in the short term, human capital inequality is negatively associated to the average regional income and the average level of education of the population. The results also highlight that a highly unequal distribution of education level completed is associated to lower, rather than to higher inequality, highlighting the effectiveness of the European social system or, from a different perspective, the lack of responsiveness of EU labour market to differences in qualifications and skills. Additionally, high unemployment is associated with higher income inequality, while urbanisation has the opposite effect.
    Date: 2006–08
  4. By: Budria, Santiago
    Abstract: How do the family and personal characteristics of an individual influence his/her edu-cational attainment? How do the labour market prospects change when he/she receives further education? This article intends to answer these two questions. To that purpose, it reviews the most recent literature for the Spanish case. The goal is to obtain fresh in-sights into the connection between education and economic inequality.
    Keywords: Inequality; demand for education; overeducation
    JEL: J31 D31
    Date: 2006–06–20
  5. By: Ines P. Murillo
    Abstract: The main objective of the present paper is to analise the differences in returns to education and rates of human capital depreciation between regions in Spain, during the period 1995-2002. To this end, the theoretical framework proposed by Raymond & Roig (2004) is used to incorporate the depreciation of human capital into the analysis of the private returns on education. Aditionally, the distinction between the two sources of human capital depreciation is approached by means of an estimation by sector –Neuman & Weiss (1995)- and an estimation by occupation.
    Date: 2006–08
  6. By: Jens Suedekum
    Abstract: In this paper I analyze the impact of initial human capital on subsequent city employment growth for the case of West Germany (1977-2002). I find robust evidence that skilled local areas have grown stronger than unskilled ones. But this observed positive relation need not indicate a localized human capital externality. A large initial share of highly skilled workers significantly reduces subsequent growth of high-skilled jobs. The observed positive impact on total employment growth is, thus, due to the fact that the positive effect on low- and medium-skilled jobs outweighs the negative effect on high-skilled employment. This evidence is in line with complementarities among skill groups as the major causal link between human capital and regional employment growth. It challenges theories of self-reinforcing spatial concentration of highly skilled workers in cities due to strong localized external effects.
    Date: 2006–08
  7. By: Paolo Buonanno (Department of Economics, University of Bergamo); Leone Leonida (Department of Economics, Queen Mary University of London)
    Abstract: This paper studies the impact of education on criminal activity in Italy. We propose a theoretical framework to determine the effects of education and past incidence of crime on criminal activity, and we test its predictions using annual data for the twenty Italian regions over the period 1980-1995. The results show that education is negatively correlated with delinquency and that crime rates display persistence over time. Our results are robust to model specifications and endogeneity.
    Keywords: Crime; Education; Panel Data
    JEL: I2 J24 K42
    Date: 2005–06
  8. By: Budria, Santiago; Nunes, Celso
    Abstract: This article summarises the recent literature on the relationship between inequality in wages and education for Portugal. The main conclusions are the following. First, Portu-gal is one of the OECD countries with lowest educational level. At the same time, re-turns to education are large, and suggest that skills are particularly valuable in the Por-tuguese labour market. Second, over the last two decades returns to education increased steadily, which suggests that skill-biased technological change is partly responsible for the observed pattern. Analysis of the returns across educational levels and the dispersion of returns over the wage distribution reveals that education may have helped to increase both between-group and within-group inequality. Third, the recent evolution of average years of education has lead to a considerable increase in the standard measures of over-education, particularly among younger cohorts. Since schooling mis-matches are associated with lower wages, recent changes in the educational composition of the workforce may have conse-quences for the wage distribution. Fourth, some conclusions can also be established on the interaction between formal education and acquired skills. Most forms of training are associ-ated with higher wages and appear to act as remedial education. Less educated individuals are less likely to get trained. However, once trained, they obtain larger returns. Finally, analysis of employment opportunities and school-to-work transitions suggests that more edu-cated individuals benefit from better job opportunities and receive more job offers.
    Keywords: Wage inequality; Returns to education; signalling; training
    JEL: J31 D31
    Date: 2005–06
  9. By: Paolo Buonanno (Department of Economics, University of Bergamo)
    Abstract: This paper investigates the relationship between labour market conditions and crime in Italy accounting for both age and gender in unemployment measure and considering regional disparities between North-Centre and South of Italy. Using regional data over the period 1993-2002, we study the impact of wages and unemployment on different types of crime. To mitigate omitted-variables bias we control extensively for demographic and socioeconomic variables. Empirical results suggest that unemployment has a large and positive effect on crime rate in southern regions. Our results are robust to model specification, endogeneity, changes in the classification of crimes and finally, to alternative definitions of unemployment.
    Keywords: Crime; Unemployment; Panel Data
    JEL: J00 K40
    Date: 2005–06
  10. By: Juho Aaltonen; Tanja Kirjavainen; Antti Moisio
    Abstract: This study measures efficiency differences and productivity changes of Finnish municipalities providing comprehensive school education during 1998-2004 by estimating both production and cost functions. The average inefficiency was approximately 6-10 percent during 1998-2004 based on both production and cost function estimations. Both approaches also produced very similar inefficiency rankings for the municipalities. Based on the results of cost functions, both the size of the municipality and average school size had a nonlinear impact on costs. The optimal municipal size was approximately 24 000-37 000 inhabitants and optimal school size was 690 students. The share of students in remedial instruction, the share of students using transportation, and taxable income per inhabitant had a positive impact on costs whereas the share of students in lower school decreased the costs. The productivity of the comprehensive schools decreased on average 12 percent during the period. The increase in per capita taxable income and the share of students in remedial instruction had the biggest impact on the productivity decrease whereas the increase in school size clearly enhanced productivity.
    Keywords: comprehensive education, efficiency, productivity
    Date: 2006–12–20
  11. By: Aamer Abu-Qarn (Department of Economics, Ben-Gurion University of the Negev); Suleiman Abu-Bader (Department of Economics, Ben-Gurion University of the Negev)
    Abstract: This paper reconsiders the A versus K debate, namely, which factor is the leading contributor to economic growth? productivity gains (A) or factor accumulation (K). The growth accounting analysis is conducted for ten Middle Eastern and North African (MENA) countries over the period 1960-1998. The long-run share of capital in national income is estimated using cointegration (country-specific) and panel data (region-specific) methods. We find that for most of the countries in our sample the share of capital is much higher than the conventional share of 0.3-0.4. The growth accounting exercise conducted with the incorporation of human capital reveals that for the MENA region the contribution of productivity gains to economic growth is negligible and frequently even detrimental. Thus, we conclude that it is factor (both physical and human) accumulation that drives the economic performance of MENA economies.
    Keywords: Growth Accounting, Productivity and Factor Accumulation, MENA, Middle-East, Cointegration, Panel Data
    JEL: O47 O53 C22 C23
    Date: 2005–07
  12. By: Alcala, Francisco; Hernandez, Pedro J.
    Abstract: We analyze in a simple model the consequences of efficiency heterogeneity at the firm level for the sorting of workers with different skills into firms with different characteristics. We show that more efficient firms tend to produce higher quality output in equilibrium, which then translates into higher relative demand of education and unmeasured skills. The model provides an integrated explanation within a competitive framework for the observed correlations between several establishment characteristics (size, employees’ average education, capital/labor ratio, and remoteness of selling markets) and average wages. We test the implications of the model using Spanish employer-employee matched data that allow to simultaneously control for establishment and worker characteristics. We find that average education in the establishment is increasing in the remoteness of its main market. Establishment’s size, remoteness of main market, and co-workers’ average education have significant, robust and quantitatively important positive joint effects on wages. The national-market orientation effects (with respect to local-market orientation) on labor composition and wages are at least as important as the international-market effects (with respect to national-market orientation). All wage premia are non-decreasing on worker education and most of them are strictly increasing, suggesting that unmeasured skills are relatively more important for high-education workers.
    Keywords: Quality Competition; Exporting Firms; Unobservable Skills; Wages.
    JEL: J24 J31
    Date: 2005–10
  13. By: José Luis Groizard (Universitat de les Illes Balears); Joan Llull (Universitat de les Illes Balears)
    Abstract: The economic effects of the migration of skilled workers from developing countries are highly controversial in the theoretical literature. Traditional models on the brain drain phenomenon stress the negative impact on growth, while new models introduce the possibility of a brain gain for labor exporting economies through indirect channels (i.e. increased incentives for those individuals left behind to accumulate human capital), or direct channels (such as remittances, return migration or FDI and trade linkages). Using a new dataset on the educational level of the migration workforce into the OECD, we test the hypothesis of brain gain estimating a growth equation and a human capital equation. We reject the hypothesis of brain gain in all the cases. The results confirm that countries which export high skilled labor to rich economies tend to have a lower level of human capital and, hence, worse economic performance.
    Keywords: Human capital formation, international migration, skilled workers, development, source country effects, instrumental variables.
    JEL: C30 F22 J24 O15
    Date: 2006
  14. By: Antonio Carlos Campino; F.M.S. Machado
    Abstract: The main objective of the research is to analyze the relationship between human capital formation, and processes of economic growth and social development by exploring the use of the population's nutritional and health variables to assess the quality of human capital and the mechanisms through which this capital is transmitted between generations among people of different races living in different regions of Brazil. This research includes considerations on recent advances in the economic growth theory that relates health, human capital, and long-term economic growth (see Fogel, R.W. "The Impact of Nutrition on Economic Growth", July/2001.) The evidence is obtained from the analysis of an important Brazilian database, “Pesquisa de Padrão de Vidaâ€, the Brazilian version of the World Bank´s “Living Standard Measurement Surveyâ€, conducted between 1996 and 1997, for the Northeast and Southeast Regions. The model we developed has two phases. In phase one we verified the factors which explain the differences in human capital formation between races, using the region and the area where the person lived as control variables. This part of the study focuses on information pertaining to economically active individuals (people between 19 and 59 years-old, both genders)with the purpose to analyze the connection between individuals' health variables, such as height and health status, and socioeconomic variables, like income and educational attainment, In phase two, the factors that explain the differences in the intergenerational transmission of human capital among races, were determined; area (urban x rural) and region were used as control variables. This part of the study focuses on information pertaining to individuals belonging to the same group, with at least one child to raise (2 to 21 years-old, both genders) in order to evaluate the intergenerational transmission of human capital. Results lead to the conclusion that relevant investments in human capital formation, such as educational attainment, create better opportunities to the individual in terms of employment and income. Beyond these primary effects, however, there are secondary effects, mainly based on the transmission of human capital formation through generations, which result in population lifestyle changes, economic growth and development.
    Date: 2006–08
  15. By: Bradbury, Bruce
    Abstract: The poor socio-economic outcomes of women who have their first child when young are well documented. However, the policy implications of this association depend upon the causal mechanisms that underlie it. Recent studies in the US and UK have used miscarriage as an instrument to identify the direct causal impact of young childbearing – with US research suggesting that early child-bearing may even have a beneficial impact upon mother’s outcomes. This paper uses this method to examine this issue for a new Australian panel of young women. No evidence is found for an adverse impact of young childbirth on education, labour market, income or location. Instead these outcomes follow the patterns that might be expected on the basis of selection effects. On the other hand, young motherhood does have an impact on partnering outcomes. Being a young mother reduces the likelihood of being legally married (instead of defacto partnered) when aged in the late 20s. Also, having a child in the early rather than late 20s leads to a greater likelihood of being a lone parent at around age 30.
    Keywords: teenage mothers; miscarriage
    JEL: J12 J13
    Date: 2006–09
  16. By: Maria I. Marshall; Ananya Samal (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: Entrepreneurship is a crucial ingredient of economic growth and job creation. Small business start-ups are currently of great interest to many state and local governments including Indiana. With the growing need to stimulate small business development, it is necessary to understand the obstacles faced by entrepreneurs as they attempt to start a business. The results have implications for small business development and university related centers and how they design programs to effectively meet the needs of entrepreneurs participating in small business start-ups. More explicitly, the results show that targeting educational programs by socio-economic and demographic segments would have lead to a better chance of programming success
    Keywords: Human capital, financial capital, entrepreneurship, firm birth, rural
    JEL: J24 M13 M20
    Date: 2006

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