nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2007‒01‒28
fourteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. A Review of Human Capital Theory: Microeconomics By Kai-Joseph Fleischhauer
  2. The Role of School Improvement in Economic Development By Eric A. Hanushek; Ludger Woessmann
  3. Educational Inputs and Outcomes Before the Transition from Communism By Beirne, John; Campos, Nauro F
  4. The Creative Class or Human Capital? - explaining regional development in Sweden By Mellander, Charlotta; Florida, Richard
  5. Managerial Capital and the Market for CEOs By Kevin J. Murphy; Jan Zabojnik
  6. Effects on School Enrollment and Performance of a Conditional Cash Transfers Program in Mexico By de Janvry, Alain; Dubois, Pierre; Sadoulet, Elisabeth
  7. Demand for higher education programs: the impact of the Bologna process By Fernando Alexandre; Carla Sá
  8. Evaluating Methods for Evaluating Instruction: The Case of Higher Education By Bruce A. Weinberg; Belton M. Fleisher; Masanori Hashimoto
  9. The educational attainment of the second generation in Germany : social origins and ethnic inequality By Kristen, Cornelia; Granato, Nadia
  10. Parental Education and Child Health: Evidence from a Schooling Reform By Maarten Lindeboom; Ana Llena Nozal; Bas van der Klaauw
  11. Do childless households support local public provision of education By Berardino Cesi
  12. Comprehensive Adult Education as a Means of Reducing Unemployment By Lindquist, Torbjörn
  13. Management of Knowledge Workers By Hvide, Hans Krogh; Kristiansen, Eirik Gaard
  14. The Technology of Skill Formation By Flavio Cunha; James Heckman

  1. By: Kai-Joseph Fleischhauer
    Abstract: With the beginning of the new millennium it has become more and more apparent that education and human capital constitute a key element of modern economies. Despite the important role of human capital in modern societies, there are still many unknowns about the process of educational production as well as individual and collective decisions concerning how much and what kind of education to obtain. This literature review aims at providing a better understanding of the process of human capital formation and educational attainment. Although human capital plays an important role in both microeconomics and macroeconomics, we focus on the former branch of literature in order to analyze the individual incentives to acquire skills. This review is divided into six parts each of them representing an important stream of human capital literature. First, we introduce the basic concept of human capital that models individuals as investing in skills in response to the expected returns to education. After this, we investigate the different implications of investments in general and specific human capital and then provide an overview of various empirical studies measuring the rate of return to education. Because educational attainment may also be affected by other factors such as school characteristics or family background, we review the literature on educational production functions and discuss the significance of potential inputs into the process of educational production. Subsequently, we refer to models of human capital accumulation over the life-cycle that manage to replicate the empirical life-cycle patterns with respect to the age-earnings profile of individuals. Finally, we analyze the effects of taxation and education subsidies on the formation of human capital. Length: 50 pages
    Keywords: Human Capital, Return to Education, Education Production Function, Life-Cycle of Earnings, Education Subsidies
    JEL: H24 H52 I20 I21 I28 J24 J31 J41
    Date: 2007–01
  2. By: Eric A. Hanushek; Ludger Woessmann
    Abstract: The role of improved schooling, a central part of most development strategies, has become controversial because expansion of school attainment has not guaranteed improved economic conditions. This paper reviews the role of education in promoting economic well-being, with a particular focus on the role of educational quality. It concludes that there is strong evidence that the cognitive skills of the population - rather than mere school attainment - are powerfully related to individual earnings, to the distribution of income, and to economic growth. New empirical results show the importance of both minimal and high level skills, the complementarity of skills and the quality of economic institutions, and the robustness of the relationship between skills and growth. International comparisons incorporating expanded data on cognitive skills reveal much larger skill deficits in developing countries than generally derived from just school enrollment and attainment. The magnitude of change needed makes clear that closing the economic gap with developed countries will require major structural changes in schooling institutions.
    JEL: H4 I2 J0 O1 O4
    Date: 2007–01
  3. By: Beirne, John; Campos, Nauro F
    Abstract: Conventional wisdom suggests that the stocks of human capital were one of the few positive legacies from communism. However, if factories under communism were so inefficient, why would the education system not have been? Using the education production function approach and new data on educational inputs and outcomes from 1960 to 1989, we find evidence suggesting that the official human capital stocks figures were 'over-estimated' during the communist period. In other words, we find that the official human capital stock numbers are significantly higher than those predicted not only in relation to countries at similar levels of development, but also on the basis of educational systems with comparable features and efficiency levels.
    Keywords: education; human capital; transition economies
    JEL: J24 O11 P27
    Date: 2007–01
  4. By: Mellander, Charlotta (Jönköping International Business School and CESIS); Florida, Richard (School of Public Policy, George Mason University)
    Abstract: Human capital is observed to be an important contributor to growth but unevenly distributed geographically. While there is consensus on the importance of human capital to economic development, debate takes shape around two central issues. First, there is the question of how best to measure human capital. Second, there is debate over the factors that yield the geographic distribution of human capital in the first place. We find that occupational or “creative class” measures tend to outperform educational measures in accounting for regional development across our sample of Swedish regions. We also find that universities, amenities or service diversity and openness and tolerance affect the distribution of human capital. A key finding is also that each of these factors is associated with a different type of human capital and thus they play complimentary roles in the geographic distribution of talent.
    Keywords: Creative occupations; Human Capital; Technology; Economic Development
    JEL: J24 O30 R11 R12 R20
    Date: 2007–01–18
  5. By: Kevin J. Murphy (USC); Jan Zabojnik (Queen's University)
    Abstract: This paper reconciles two pronounced trends in U.S. corporate governance: the increase in pay levels for top executives, and the increasing prevalence of appointing CEOs through external hiring rather than internal promotions. We propose that these trends reflect a shift in the relative importance of "managerial ability" (transferable across companies) and "firm-specific human capital" (valuable only within the organization). We show that if the supply of workers in the corporate sector is relatively elastic, an increase in the relative importance of managerial ability leads to fewer promotions, more external hires, and an increase in equilibrium average wages for CEOs. We test our model using CEO pay and turnover data from 1970 to 2000. We show that CEO compensation is higher for CEOs hired from outside their firm, and for CEOs in industries where outside hiring is prevalent.
    Keywords: CEO pay, CEO turnover, General skills, Firms specific skills
    JEL: J24 J31 J63
    Date: 2006–10
  6. By: de Janvry, Alain; Dubois, Pierre; Sadoulet, Elisabeth
    Abstract: We study the effects of a conditional cash transfers program on school enrollment and performance in Mexico. We provide a theoretical framework for analyzing the dynamic educational process including the endogeneity and uncertainty of performance at school (passing grades) and the effect of a cash transfer program conditional on school attendance. This framework is developed to study the Mexican social program Progresa (called now Oportunidades) in which a randomized experiment has been implemented and allows us to identify the effect of the program on enrollment and performance at school. Using the rules of the conditional program, we can explain the different incentive effects provided. We also derive the formal identifying assumptions needed to estimate consistently the average treatment effects on enrollment and performance at school. We find empirically that this program had always a positive impact on school continuation whereas for performance it had a positive impact at primary school but a negative one at secondary school (a possible consequence of disincentives due to the program termination after the third year of secondary school).
    Keywords: dynamic decisions; education demand; Mexico; randomized experiment; school performance; schooling decisions; transfer program; treatment effects
    JEL: C14 C25 D91 H52 H53 I21 I28 J24
    Date: 2007–01
  7. By: Fernando Alexandre (Universidade do Minho - NIPE); Carla Sá (Universidade do Minho - NIPE)
    Abstract: The Bologna process aims at creating a European Higher Education Area where intercountry mobility of students and sta?, as well as workers holding a degree, is facilitated. While several aspects of the process deserve wide public support, the reduction of the length of the first cycle of studies to three years, in several continental European countries where it used to last for four or five years, is less consensual. The paper checks the extent of public confidence in the restructuring of higher education currently underway, by looking at its implications on the demand for academic programs. It exploits the fact that some programs have restructured under the Bologna process and others have not, in Portugal. Precise quantification of the demand for each academic program is facilitated by the rules of access to higher education, in a nation-wide competition, where candidates must list up to six preferences of institution and program. We use regression analysis applied to count data, estimating negative binomial models. Results indicate that the programs that restructured to follow the Bologna principles were subject to higher demand than comparable programs that did not restructure, as if Bologna were understood as a quality stamp. This positive impact was reinforced if the institution was a leader, i.e. the single one in the country that restructured the program. Still an additional increase in demand was experienced by large programs that restructured to o?er an integrated master degree, thus conforming to Bologna principles while not reducing the program duration.
    Keywords: education policy; European Higher Education Area; economic, social and cultural integration; count data.
    JEL: I28 I21 F15
    Date: 2007
  8. By: Bruce A. Weinberg; Belton M. Fleisher; Masanori Hashimoto
    Abstract: This paper studies methods for evaluating instruction in higher education. We explore student evaluations of instruction and a variety of alternatives. We develop a simple model to illustrate the biases inherent in student evaluations. Measuring learning using grades in future courses, we show that student evaluations are positively related to current grades but uncorrelated with learning once current grades are controlled. We offer evidence that the weak relationship between learning and student evaluations arises in part because students are not aware of how much they have learned in a course. We conclude with a discussion of alternative methods for evaluating teaching.
    JEL: A2 I2 J24
    Date: 2007–01
  9. By: Kristen, Cornelia; Granato, Nadia (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "With the German Microcensus we study the second generation's educational attainment in Germany focusing on the descendants of classic labour migrants. Our results show that educational outcomes in terms of attending or completing the highest schooling track leading to the Abitur considerably vary among different ethnic groups. Second generation young adults, in particular Turks and Italians, experience pronounced disadvantages in comparison to their German peers. The central question in this context is to what extent ethnic stratification in the German school system is related to educational and social background. Our findings suggest that ethnic disadvantages primarily result from social rather than from specific ethnic inequalities, since initial differences in the chances of attaining the Abitur disappear after considering educational and social origin, the only exception being Italian young adults." (author's abstract, IAB-Doku) ((en))
    JEL: I21 J61 J62
    Date: 2007–01–18
  10. By: Maarten Lindeboom (Vrije Universiteit Amsterdam); Ana Llena Nozal (Vrije Universiteit Amsterdam); Bas van der Klaauw (Vrije Universiteit Amsterdam)
    Abstract: This paper investigates the impact of parental education on child health outcomes. To identify the causal effect we explore exogenous variation in parental education induced by a schooling reform in 1947, which raised the minimum school leaving age in the UK. Findings based on data from the National Child Development Study suggest that postponing the school leaving age by one year had little effect on the health of their offspring. Schooling did however improve economic opportunities by reducing financial difficulties among households. We conclude from this that the effects of parental income on child health are at most modest.
    Keywords: returns to education; intergenerational mobility; health; regression-discontinuity
    JEL: I12 I28
    Date: 2006–12–19
  11. By: Berardino Cesi
    Abstract: Empirical and theoretical studies show that the local provision of public education affects the well being of individuals through two channels: the first reflects the direct use of the good, whereas the second runs through the value of the housing. The second effect leans on the idea that the quality of public education is capitalized into the value of the own housing. Empirical evidence finds that in a multi-community model childless households support local public spending in education because of the capitalization effect. I study the behavior of childless households, not necessarily elderly, in a two community model and show that the capitalization effect may not be a sufficient condition for middle aged households without children to support local public spending in education by a majority voting.
    JEL: H52 H72 I22 R2
    Date: 2007–02
  12. By: Lindquist, Torbjörn (Department of Economics, Umeå University)
    Abstract: This paper evaluates whether general education is better than traditional vocational training as a means of reducing the time individuals remain in unemployment and the risk for the individual of becoming unemployed. The empirical analysis is built on longitudinal data from Sweden. Postprogram unemployment for unemployed participants in comprehensive adult education and participants in labor market training is compared. Generally, the results indicate no substantial di¤erence between the two programs regarding their e¤ects on post-program unemployment.
    Keywords: Proportions; unemployment; adult education
    JEL: I29 J64
    Date: 2005–12–19
  13. By: Hvide, Hans Krogh; Kristiansen, Eirik Gaard
    Abstract: We study how complementarities and intellectual property rights affect the management of knowledge workers. The main results relay when a firm will wish to sue workers that leave with innovative ideas, and the effects of complementary assets on wages and on worker initiative. We argue that firms strongly protected by property rights may not sue leaving workers in order to motivate effort, while firms weakly protected by complementary assets must sue in order to obtain positive profits. Firms with more complementary assets pay higher wages (and have lower turnover), but such higher pay has a detrimental effect on worker initiative. Our analysis suggests that strengthened property rights protection reduces turnover costs but weakens worker initiative.
    Keywords: Entrepreneurship; Innovation; IPR; Litigation; Personnel economics; R&D; Start-ups
    JEL: E00
    Date: 2007–01
  14. By: Flavio Cunha; James Heckman
    Abstract: This paper develops a model of skill formation that explains a variety of findings established in the child development and child intervention literatures. At its core is a technology that is stage-specific and that features self productivity, dynamic complementarity and skill multipliers. Lessons are drawn for the design of new policies to alleviate the consequences of the accident of birth that is a major source of human inequality.
    JEL: I38 J13 J24
    Date: 2007–01

This nep-hrm issue is ©2007 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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