nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2007‒02‒10
eighteen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. The role of education quality for economic growth By Hanushek, Eric A.; Woessmann, Ludger
  2. The Determinants of New-firm Survival across Regional Economies By Zoltan J. Acs; Catherine Armington; Ting Zhang
  3. Demand for higher education programs: the impact of the Bologna process By Ana Rute Cardoso; Miguel Portela; Fernando Alexandre; Carla Sá
  4. Does Money Buy Higher Schooling? Evidence from Secondary School Track Choice in Germany By Marcus Tamm
  5. The impact of private provision of public education : empirical evidence from Bogota ' s concession schools By Barrera-Osorio, Felipe
  6. The Wage Effects of Graduate Competition By Malcolm Brynin; Simonetta Longhi
  7. Risky human capital and deferred capital income taxation By Borys Grochulski; Tomasz Piskorski
  8. Skill dispersion and firm productivity: an analysis with employer-employee matched data By Susana Iranzo; Fabiano Schivardi; Elisa Tosetti
  9. The Long Term Effect of Education Spending Decentralization on Human Capital in Spain By Merrouche, Ouarda
  10. Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform By Eric V. Edmonds; Nina Pavcnik; Petia Topalova
  11. Chronic Low Income and Low-income Dynamics Among Recent Immigrants By Picot, Garnett; Hou, Feng; Coulombe, Simon
  12. A Study on Mush-room growth of Two-year Management Programme and its Impact on Quality of Management Education in Tamil Nadu By Subramanian Saravanan
  13. Using the hierarchical linear model to understand school production in South Africa By Martin Gustafsson
  14. Intellectual capital valorization - criteria for the managerial performance in the knowledge-based society By Herciu, Mihaela; Ogrean, Claudia
  15. Remittances and the dynamics of human capital in the recipient country By Bertoli Simone
  16. The Long Term Impact of French Settlement on Education in Algeria By Merrouche, Ouarda
  17. What determines entrepreneurial clusters? By Luigi Guiso; Fabiano Schivardi
  18. HRM as a significant factor for achieving competitiveness through people – The case of Croatia By Nina Pološki Vokić; Maja Vidović

  1. By: Hanushek, Eric A.; Woessmann, Ludger
    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, focusing 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 it clear that closing the economic gap with industrial countries will require major structural changes in schooling institutions.
    Keywords: Education For All,Teaching and Learning,Primary Education,Tertiary Education,Secondary Education
    Date: 2007–02–01
  2. By: Zoltan J. Acs; Catherine Armington; Ting Zhang
    Abstract: Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods.
    Keywords: New-Firm Survival, Human Capital, Knowledge Spillovers, Entrepreneurship, Labor Market Area
    JEL: J24 L80 M13 O3 R1
    Date: 2006–12
  3. By: Ana Rute Cardoso (IZA Bonn, Universidade do Minho, and CEPR); Miguel Portela (Universidade do Minho - NIPE, Tinbergen Institute and IZA Bonn); 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 offer 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
  4. By: Marcus Tamm (RWI Essen and Ruhr-University Bochum)
    Abstract: The German schooling system selects children into different secondary school tracks already at a very early stage in life. School track choice heavily influences choices and opportunities later in life. It has often been observed that secondary schooling achievements display a strong correlation with parental income. We use sibling fixed effects models and information on a natural experiment in order to analyze whether this correlation is due to a causal effect of income or due to unobservable factors that themselves might be correlated across generations. Our main findings suggest that income has no positive causal effect on school choice and that differences between high- and low-income households are driven by unobserved heterogeneity, e.g. differences in motivation.
    Keywords: Child poverty, educational attainment, secondary schools, sibling differences, natural experiment.
    JEL: D31 I21 J13
    Date: 2007
  5. By: Barrera-Osorio, Felipe
    Abstract: In 1999 the city of Bogota, Colombia launched the concession school program designed to broaden the coverage and quality of basic education. It consists of a contract between a group of private schools and the public educational system such that private agents provide education for low-income students. This paper tests three main hypotheses concerning the impact of concessions on the quality of education: first, dropout rates are lower in concession schools than in similar public schools; second, other public schools nearby the concession schools have lower dropout rates in comparison with other public schools outside the area of influence; and third, test scores from concession schools are higher than scores in similar public schools. The paper presents evidence in favor of the three hypotheses using propensity score and matching estimators.
    Keywords: Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning
    Date: 2007–02–01
  6. By: Malcolm Brynin (Institute for Social and Economic Research); Simonetta Longhi (Institute for Social and Economic Research)
    Abstract: Higher education has expanded considerably in recent years. Human capital theory implies that this expansion has been the result of a growth in demand for higher level technical and managerial skills – commonly known as the technology bias thesis. Evidence of a positive coefficient for higher education relative to lower educational levels in Mincer-type wage equations and the maintenance of this differential over time are treated as supportive of the technology bias thesis. A more sociological approach might take into account increased social demand for education, which should result in increased competition between graduates for jobs. Moreover, the jobs which face the most competition from graduates are likely to be those which already have a high proportion of graduates, as graduate density itself becomes a signal of status. Using British Labour Force Survey data spanning ten years, when a measure of graduate density within occupations is incorporated in a wage equation, it appears that the higher the proportion of graduates in an occupation the lower the salary each individual receives, even controlling for education. This suggests a social rather than a material explanation of the expansion of higher education.
    Keywords: education, labour supply, wages
    Date: 2006–12
  7. By: Borys Grochulski; Tomasz Piskorski
    Abstract: We study the structure of optimal wedges and capital taxes in a Mirrlees economy with endogenous skills. Human capital is a private state variable that drives the skill process of each individual. Building on the findings of the labor literature, we assume that human capital investment is a) risky, b) made early in the life-cycle, and c) hard to distinguish from consumption. These assumptions lead to the optimality of a) a human capital premium, i.e., an excess return on human capital relative to physical capital, b) a large intertemporal wedge early in the life-cycle stemming from the lack of Rogerson's [Econometrica, 1985] "inverse Euler" characterization of the optimal consumption process, and c) an intra-temporal distortion of the effort/consumption margin even at the top of the skill distribution at all dates except the terminal date. The main implication for the structure of linear capital taxes is the necessity of deferred taxation of physical capital. In particular, deferred taxation of capital prevents the agents from making a joint deviation of under-investing in human capital ex ante and shirking from labor effort at some future date in the life-cycle, as the marginal deferred tax rate on physical capital held early in the life-cycle is history-dependent. The average marginal tax rate on physical capital held in every period is zero in present value. Thus, as in Kocherlakota [Econometrica, 2005], the government revenue from capital taxation is zero. However, since a portion of the capital tax must be deferred, expected capital tax payments cannot be zero in every period. Necessarily, agents face negative expected capital tax payments due early in the life-cycle and positive expected capital tax payments late in the life-cycle. Also, relative to economies with exogenous skills, the optimal marginal wealth tax rate is more volatile
    Keywords: Taxation
    Date: 2007
  8. By: Susana Iranzo; Fabiano Schivardi; Elisa Tosetti
    Abstract: We study the relation between workers’ skill dispersion and firm productivity using a unique dataset of Italian manufacturing firms from the early eighties to the late nineties with individual records on all their workers. Our measure of skill is the individual worker’s effect obtained as a latent variable from a wage equation. Estimates of a generalized CES production function that depends on the skill composition show that a firm’s productivity is positively related to skill dispersion within occupational status groups (production and non-production workers) and negatively related to skill dispersion between these groups. Consistently, the variance decomposition shows that most of the overall skill dispersion is within and not between firms. We find no change over time in the share of each component, in contrast with some evidence from other countries, based on less comprehensive data.
    Keywords: Matched data, Skill distribution, Productivity, Segregation.
    JEL: D24 J24 L23
    Date: 2006
  9. By: Merrouche, Ouarda (Department of Economics)
    Abstract: In 1980, seven out of the seventeen Spanish regions were devolved education spending responsibility. Using a difference-in-differences approach, which I show to be particularly credible in this context, I evaluate the long term effect of this reform on human capital. I find no robust evidence to corroborate the theoretically predicted benefits of decentralization.
    Keywords: Decentralization; Education; Difference-in-differences estimator
    JEL: E61 E65
    Date: 2007–01–15
  10. By: Eric V. Edmonds; Nina Pavcnik; Petia Topalova
    Abstract: Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India's 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline in child labor. However, communities that relied heavily on employment in protected industries before liberalization do not experience as large an increase in schooling or decline in child labor. The data suggest that this failure to follow the national trend of increasing schooling and diminishing work is associated with a failure to follow the national trend in poverty reduction. Schooling costs appear to play a large role in this relationship between poverty, schooling, and child labor. Extrapolating from our results, our estimates imply that roughly half of India's rise in schooling and a third of the fall in child labor during the 1990s can be explained by falling poverty and therefore improved capacity to afford schooling.
    JEL: F14 F16
    Date: 2007–02
  11. By: Picot, Garnett; Hou, Feng; Coulombe, Simon
    Abstract: The deteriorating economic outcomes among immigrants entering during the 1980s and 1990s have prompted much public concern and policy debate. In 1993, immigrant selection procedures were further modified to increase immigrants' educational attainment and the share of immigrants in the "skilled" economic class. By 2000, dramatic increases in the educational attainment of entering immigrants and the share in the skilled class were observed. In the face of these and other changes, this research focuses on three issues: (1) whether entering immigrants economic outcomes improved after 2000 (the last date for which we have such information from the census), (2) low-income dynamics among successive cohorts of entering immigrants, including changes in the entry and exit probabilities, and the extent of "chronic" low income among successive cohorts, and, (3) whether rising educational attainment and increasing share in the "skilled" class resulted in improvements in economic outcomes as measured by poverty entry, exit and chronic low income. Based on the Longitudinal Administrative Database (LAD) and the Longitudinal Immigration Database (IMDB) data, we find that low-income rates among recent immigrants deteriorated after 2000. Low-income rates of immigrants during their first full year in Canada reached 3.5 times that of the Canadian born in 2002 and fell to 3.2 times in 2004. These rates were higher than at any time during the 1990s (at around 3.0). However, this rise in low income was concentrated among immigrants who had entered very recently (in Canada one or two years), suggesting an increase in the short-term adjustment problem in the 2000s as compared to the 1990s. The downturn in the technology sector after 2000 might be a partial explanation, as the share of entering immigrants in information technology (IT) and engineering occupations rose dramatically over the 1990s. Among immigrants entering Canada during the 1990s, most exp
    Keywords: Ethnic diversity and immigration, Education, training and learning, Income, pensions, spending and wealth, Integration of newcomers, Outcomes of education, Low income and inequality
    Date: 2007–01–30
  12. By: Subramanian Saravanan
    Abstract: This paper addresses the quantum jump in the number of two-year management programmes in India. It examines the quality adherence by taking institutions approved and affiliated by All India Council for Technical Education (AICTE), University Grants Commision (UGC), Central Government Autonomus Institue (NIT,Trichy) and Deemed universities, which offers two-year management programmes over the past fifteen years from Tamilnadu as a sample unit. The objective is to identify the key reasons for increase in numbers and initiative in quality implementations process. It enables us to understand the qualitative terms of inorganic growth and its impact on quality of management education. It provides experiential understanding of quality implementation process and suggestions to increase its effectiveness.
    Keywords: Two-year management programme, Quantum jump, Quality initiative, Management education and Quality control
    Date: 2007–02–01
  13. By: Martin Gustafsson (Research Triangle Insitute, Department of Education (Tswane))
    Abstract: The emphasis placed in the existing South African school production function literature on better skilled teachers and better school management is discussed. Ordinary least squares and hierarchical linear production function models, using 2000 SACMEQ data, for the country and for a sub-set of historically disadvantaged schools, are constructed. Ways of making the results more readable for policymakers are explored. The importance of physical infrastructure, textbook and nutrition budgets is highlighted by the models. Correct allocation of teaching and management time in schools, less learner repetition, and better teaching methodologies stand out as important school and classroom management imperatives.
    Keywords: Educational quality, Education policy, Education resources, SACMEQ, South Africa
    JEL: I21 H52
    Date: 2007
  14. By: Herciu, Mihaela; Ogrean, Claudia
    Abstract: If we can see the knowledge society as an essential part of the “external environment” of the firm management, that brings with it some specific opportunities and threats, we have to consider the intellectual capital – that integrates the two basic resources: knowledge and human – a key ingredient for the “internal environment” of the firm management, which determines some strengths and/or weaknesses that lead to the success or the failure of the managerial effort of the firm operating under the circumstances given by the emergency of three processes with global spread: the economic globalization, the managerial revolution and the knowledge-based society. Having as starting point the premise that Peter Drucker emphasized years ago: the managerial revolution represents the third essential change into the dynamics of knowledge, when knowledge is applied to knowledge itself, we have to accept the priority of the human factor – which generates, uses and valorizes knowledge in a never ending process of interaction with the environment. By continuing with this logic, we can not ignore that, even if there is no unanimously recognized approach about the meaning of the intellectual capital, it appears recently a quasi-unanimous recognized opinion regarding the first place that the intellectual capital has to take as source for the competitive advantage of the firm and strategic resource for its management. More than that, in a time when knowledge becomes the strategic resource for any of the human activities, firms shift through a new managerial paradigm that characterize “the civilized business” and promote management intellectualization. By this way, the valorization of the intellectual capital of the firm could become vital criteria for the managerial performance in the knowledge – based society.
    Keywords: intellectual capital; managerial performance; knowledge-based society
    JEL: M21
    Date: 2006–05
  15. By: Bertoli Simone
    Abstract: This paper provides an analysis of the impact of migration and remittances on the inter-generational evolution of human capital in an economy that is characterized by the existence of a poverty trap at a low level of human capital. The analysìs is conducted within an overiapping generation model, where parental investment in education are driven by weakly altruistic motivations. Remittances boost educational expenditure in recipient households, and they can determine a decisive impact on the long-term dynamics of human capitai under favourabie assumptions on the wage differential and on migration costs. Under these assumptions, an exogenous probability to migrate represents an equal probabìlity of moving out of the poverty trap, that fades away in the long run, as remittances lead ali households to converge towards the equilíbríum at a high level of human capítal. Although this modei does not analyze the generai equilibrium effects of remittances - as it ìs grounded on the independence of households' dynamics - it provides a framework that is open to such an extension, that is called for by the literature on the Dutch Disease effects of remittances.
    Date: 2006–07
  16. By: Merrouche, Ouarda (Department of Economics)
    Abstract: This paper provides evidence on the long run relationship between European settlers presence and education levels in Algeria. To correct for endogenous sorting of settlers (and natives) into regions I rely on the fact that proximity to the Mediteranean coast determined the timing of conquest and therefore settlements’ size. The main finding indicates that the colonial policy of discrimination explains <p> a large fraction of the disparities in literacy across regions through 1998.However this effect declines significantly over time. I point out three factors that may explain this declining effect: (1) the massive funds allocated to the <p> education sector post-war; (2) the role of the market via migration; (3) social interaction effects whereby natives progressively adopted education and fertility norms of the settlers.
    Keywords: French rule; Discrimination; Education; Social Interactions
    JEL: I29 I38 O15
    Date: 2007–01–15
  17. By: Luigi Guiso; Fabiano Schivardi
    Abstract: We contrast two potential explanations of the substantial differences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and firm level TFP: with different entry costs, in areas with more entrepreneurs firms’ average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external effects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity
    Keywords: Entrepreneurship, clustering, agglomeration economies
    JEL: D24 D62 J23
    Date: 2006
  18. By: Nina Pološki Vokić (Faculty of Economics and Business, University of Zagreb); Maja Vidović (Faculty of Economics and Business, University of Zagreb)
    Abstract: Traditional sources of competitiveness, such as production capacities, financial resources, raw materials, distribution channels etc., are considered necessary, but no longer sufficient for organizational success. Human resources, their knowledge, skills and competencies as well as synergy among them, become the most valuable asset, the new source of wealth, and the key ingredient of competitive advantage. Consequently, the human resources function, which deals with recruiting, developing, and keeping the best people, now has the opportunity to move out of the background into the mainstream of organizational strategy and management. In other words, in a world in which all work is knowledge work and intellectual capital is crucial for economic success, it is logical that the ability to attract, retain, and use the talents of people provides a competitive edge. The aim of this paper was to evaluate the quality of HRM in Croatia, as excellent HR policies, programs and activities enable enterprises to be competitive through people. Therefore, the empirical research was conducted. The population were Croatian enterprises with more than 200 employees, out of which 80 form the final sample (response rate of 14.3%). In order to assess the value of HRM, the audit approach based on HR indicators was used. 55 HR indicators (26 quantitative and 29 qualitative ones) were analyzed, using 10 Croatian enterprises as benchmarks. The list of benchmark enterprises was generated using expert method. Precisely, enterprises from the sample that have the best HR practice were identified by the best Croatian HRM theoreticians. Results indicate that Croatian enterprises on average have insufficient HR activities. Precisely, independent samples t-test showed that 61.82% of analyzed HR indicators were significantly better for enterprises that were used as benchmarks, as well as that those enterprises have better absolute values for all of analyzed indicators. Consequently, HRM in Croatia could not be considered a solid ground for achieving competitiveness through people.
    Keywords: HRM, HR practices, competitive advantage, competitive advantage through people, audit approach, HR indicators, benchmarking
    JEL: M1 M12
    Date: 2007–01–29

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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