nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2007‒08‒27
twelve papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Software Production, Human Capital and Endogenous Growth: Theoretical Analysis and Empirical Evidence from India By Supriyo De
  2. Optimal Portfolio Choice and Investment in Education By Egil Matsen; Snorre Lindset
  3. To Segregate or to Integrate: Education Politics and Democracy By David de la Croix; Matthias Doepke
  4. Regional Characteristics of the Human Resources in Hungary During the Transitory Period By Janos Rechnitzer; Melinda Smaho
  5. A Researcher's Guide to the Swedish Compulsory School Reform By Holmlund, Helena
  6. A Dynamic Analysis of Educational Attainment, Occupational Choices, and Job Search By Sullivan, Paul
  7. International Students in the UK : how can we give them a better experience? By Warwick, Philip
  8. An Equity Perspective on Access to, Enrolment in and Finance of Tertiary Education By Rita Asplund; Oussama Ben-Abdelkarim; Ali Skalli
  9. The Curious Dawn of American Public Schools By Sun Go; Peter H. Lindert
  10. Causality Tests for Public School Performance and Funding. By Christopher C. Klein
  11. Does profit sharing increase training by reducing turnover? By John S Heywood; Colin Green
  12. Small Family, Smart Family? Family Size and the IQ Scores of Young Men By Sandra E. Black; Paul J. Devereux; Kjell G. Salvanes

  1. By: Supriyo De
    Abstract: Propelled by the rise of a vibrant software industry the Indian economy has demonstrated rapid growth since the 1990s. A novel three-sector endogenous growth model that encapsulates the salient features of an information technology oriented economy is developed. The dynamic optimization problem leads to a balanced growth path equilibrium characterized by output, physical capital, software assets, human capital and consumption growing at a uniform rate. Major implications of the model are reflected in empirical evidence from the growth trajectories of Indian states. The human capital production apparatus has a significant impact on economic growth. This has critical policy implications.
    Keywords: endogenous growth, India, information technology, human capital, software
    Date: 2007–06
  2. By: Egil Matsen (Department of Economics, Norwegian University of Science and Technology); Snorre Lindset (Department of Industrial Economics, Norwegian University of Science and Technology, and Trondheim Business School)
    Abstract: In this paper we analyze how an individual should optimally invest in her own human capital when she also has financial wealth. We treat the individual’s option to take more education as expansion options and apply real option analysis. We characterize the individual’s optimal consumption strategy and portfolio weights. The individual has a demand for hedging financial risk, labor income risk, and also wage level risk.
    Keywords: Optimal portfolio choice; Investment in human capital; Hedging demand
    JEL: C61 D14 G11 G13
    Date: 2007–07–06
  3. By: David de la Croix; Matthias Doepke
    Abstract: The governments of nearly all countries are major providers of primary and secondary education to their citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study, we ask why different societies make different choices regarding the mix of private and public schooling. We develop a theory which integrates private education and fertility decisions with voting on public schooling expenditures. In a given political environment, high income inequality leads to more private education, as rich people opt out of the public system. More private education, in turn, results in an improved quality of public education, because public spending can be concentrated on fewer students. Comparing across political systems, we find that concentration of political power can lead to multiple equilibria in the determination of public education spending. The main predictions of the theory are consistent with state-level and micro data from the United States as well as cross-country evidence from the PISA study.
    JEL: H42 H52 I22 O10
    Date: 2007–08
  4. By: Janos Rechnitzer; Melinda Smaho
    Abstract: The territorial examination of human resources and their training institutions was disregarded by the hungarian regional researches. The cause of the time-lag is that data concerning the qualification of the population are connecting to the census, which is carried out in every 10th year and it is not possible to work out reliable analyses on the territorial level (regional, county, in case of some variable settlement) without them. There is rather broad information base on the institutions training human resources. For example information on the network of secondary level education, higher education, their service palette (training directions), quantity development (number of students, teachers), state of supply (equipments), and data can be collected about the rating of institutons (mainly on secondary level) as well (the number of matriculating students). The first part of the study focuses on the relation between human resources and regional development. It sets out that human capacity is a new resource, which has more and more important role in shaping of territorial processes. The authors examine the regional features of human resources in five dimensions. First, they review the human factors like the more important demographical factors, the qualification and the Human Development Index. In case of life quality they analyse the civil society and the regional/local identity. When analysing the change of living conditions they review the role of the info-communication infrastructure in the city network. In the part on knowledge and communication network they study the regional structure and changes of training institutions (from primary school to high education) and research and development. Finally they evaluate the innovation environment of the city network in the transition period. The essay proves that regional disparities can be shown in the human resources, but their character is different from the expected, which can be experienced in the economy or settlement network. To conclude, regional disparities are manifold, the structure is divided by factors and the concentration effects of large centers is quite strong.
    Date: 2006–08
  5. By: Holmlund, Helena (Centre for Economic Performance)
    Abstract: When studying different types of returns to education, educational reforms are commonly used in the economics literature as a source of exogenous variation in education. The Swedish compulsory school reform is one example; the reform extended compulsory education throughout the country, in different municipalities at different points in time. Such variation across cohorts and regions can be used in a differences-in-differences framework, in order to estimate causal effects of education. This paper provides a guide to researchers who consider using the Swedish reform in an empirical analysis: I present a description and background of the reform, provide some baseline results, a reliability analysis of the reform coding, a discussion of whether the reform is a valid instrument, and comment on the interpretation of IV estimates of returns to schooling.
    Keywords: educational reform; instrumental variables
    JEL: I28
    Date: 2007–07–09
  6. By: Sullivan, Paul
    Abstract: This paper examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices. Individuals in the model decide when to attend school and when to move between firms and occupations over the course of their career. Workers search for suitable wage and non-pecuniary match values at firms across occupations given their heterogeneous skill endowments and preferences for employment in each occupation. Over the course of their careers workers endogenously accumulate firm and occupation specific human capital that affects wages differently across occupations. The parameters of the model are estimated with simulated maximum likelihood using data from the 1979 cohort of the National Longitudinal Survey of Youth. The structural parameter estimates reveal that both self-selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital. Eliminating the gains from matching between workers and occupations would reduce total wages by 31%, eliminating the gains from job search would reduce wages by 19%, and eliminating the effects of firm and occupation specific human capital on wages would reduce wages by only 2.8%.
    Keywords: occupational choice; job search; human capital; dynamic programming models
    JEL: J62 I21 J24
    Date: 2007–06
  7. By: Warwick, Philip
    Abstract: This paper focuses on practical actions that can be taken to improve the learning experience of international students in the UK. Informed by personal experience in the UK, New Zealand and Australia, supplemented by an extensive literature search, a series of actions are recommended to improve the learning experience of international students from culturally diverse backgrounds. The suggested actions cover issue s for individual lecturers, Departments, Higher Education Institutions and national level bodies. The approach taken is to incorporate personal reflection and personal views and the ideas of writers in the field. The paper is written in the first person and sets out the author’s wish list of ideas, hopes and aspirations for the future, from the perspective of a teaching fellow working in a research focussed University in the UK.
    Date: 2006–10
  8. By: Rita Asplund; Oussama Ben-Abdelkarim; Ali Skalli
    Abstract: The failure to achieve equitable access to university studies has turned the focus to the funding of European higher education systems. Since the large amounts of public subsidies injected in tertiary-level education have not succeeded in reducing disparities in access for children from different social backgrounds, this is seen as compelling evidence for there being a need to revise higher education financing not only on efficiency but also on equity grounds. Such policies are already pursued, planned or intensively discussed in most of Europe. More equitable access to and participation in university education through changes in the funding sources and mechanisms is a challenging policy with long-term implications. Hence, it should preferably be based on reliable empirical evidence. This raises the question of what the theoretical and empirical literature actually tells us about these matters. How severe is the under-representation of students from a socially disadvantaged background? Has this inequality changed over time across and within European countries? What role does funding play? Have the changes in funding systems already undertaken in several European countries improved the participation of students from low-income families? This review paper aims to answer these important questions by drawing together the available evidence, by contrasting it against pursued educational policies and by pointing to still existing knowledge gaps.
    Keywords: access, equity, financing, tertiary education
    JEL: I22
    Date: 2007–08–17
  9. By: Sun Go; Peter H. Lindert
    Abstract: How did a frontier nation filled with agricultural and mineral potential become a leader in education? How did a nation supposedly born of aversion to taxes and government become a pioneer in using property taxes to pay for much, and eventually most, of its primary schooling? The puzzle is best explained by a combination of schooling affordability, local autonomy, and especially political voice. We present two kinds of evidence: broad contrasts with Europe, and statistical investigation of the differences among U.S. counties in the mid-nineteenth century. Two political voice variables stand out as determinants of schooling among U.S. counties: The extent of local suffrage and the ability of Southern elites to dominate the electorate. Other standard explanations of the demand for primary education need to be revised. Past writers have overemphasized the passage of national and state laws. Contrary to another common view, cities lagged in school attendance, while the Northern countryside led the way, because political voice was more widespread in the small Northern towns.
    JEL: H52 H75 I22 N11 N31
    Date: 2007–08
  10. By: Christopher C. Klein
    Abstract: This paper seeks to shed light on the role of school funding in individual school performance. A unique data set is utilized for the Metropolitan Nashville – Davidson County School District in Tennessee, known colloquially as Metro. In 2005 the Metro school board undertook the task of breaking down individual school spending levels by funding source. The resulting 2004-2005 financial data are combined with academic test scores and demographic data for 2003-2004 and 2004-2005 academic years for each of 70 elementary schools. Econometric tests are then conducted to examine whether contemporaneous test score performance is determined by funding, or whether funding is determined by prior performance, or whether other school characteristics influence both.
    Keywords: education, public schools, performance
    JEL: I22 I28
    Date: 2007–08
  11. By: John S Heywood; Colin Green
    Abstract: We test the theoretical prediction that profit sharing reduces worker separations and by doing so increases the incidence of training. Using individual level UK data, we confirm that profit sharing is a robust determinant of lower separation rates and of greater training incidence. Critically, we cannot confirm the predicted link between separations and training. Instead, the evidence supports alternative theories suggesting a direct link between profit sharing and training. Our results suggest that profit sharing changes employer-worker relations in a way that leads to greater formal and informal investment in worker skills but that this is independent of its influence on reducing separations.
    Keywords: Profit shares, Performance pay, training, turnover
    Date: 2007
  12. By: Sandra E. Black; Paul J. Devereux; Kjell G. Salvanes
    Abstract: How do families influence the ability of children? Cognitive skills have been shown to be a strong predictor of educational attainment and future labor market success; as a result, understanding the determinants of cognitive skills can lead to a better understanding of children's long run outcomes. This paper uses a large dataset on the male population of Norway and focuses on one family characteristic: the effect of family size on IQ. Because of the endogeneity of family size, we instrument for family size using twin births and sex composition. IV estimates using sex composition as an instrument show no negative effect of family size; however, IV estimates using twins imply that family size has a negative effect on IQ. Our results suggest that effect of family size depends on the type of family size intervention. We conclude that there are no important negative effects of expected increases in family size on IQ but that unexpected shocks to family size resulting from twin births have negative effects on the IQ of existing children.
    JEL: J01 J13 J24
    Date: 2007–08

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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