nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2007‒11‒24
25 papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Regional Unemployment and Human Capital in Transition Economies By Stepán Jurajda; Katherine Terrell
  2. Acculturation Identity and Educational Attainment By Lena Nekby; Magnus Rödin; Gülay Özcan
  3. Higher Education and Equality of Opportunity in Italy By Vito Peragine; Laura Serlenga
  4. Education, Market Rigidities and Growth By Philippe Aghion; Philippe Askenazy; Renaud Bourlès; Gilbert Cette; Nicolas Dromel
  5. Educational Self-Selection, Tasks Assignment and Rising Wage Inequality By Arnaud Dupuy
  6. Income Inequality and Education Premia By Lilla, Marco
  7. The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West By Wolfgang Steffen; Johannes Stephan
  8. Training and Hiring Strategies to Improve Firm Performance By Mika Maliranta; Rita Asplund
  9. No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation By Carmen Pagés; Marco Stampini
  10. Skill Obsolescence, Lifelong Learning and Labor Market Participation By Allen Jim; Grip Andries de
  11. Capturing Talent: Generation Y and European Labor Markets By GAYLE ALLARD; CRISTINA SIMON
  12. Labour Turnover and Firm Performance By Sarah Brown; Gaia Garino; Christopher Martin
  13. Training and early Retirement By Montizaan Raymond; Coervers Frank; Grip Andries de
  14. The Impact of Participation in Sports on Educational Attainment: New Evidence from Germany By Thomas Cornelißen; Christian Pfeifer
  15. Education and Training in a Model of Endogenous Growth with Creative Wear-and-Tear By Adriaan Van Zon; Roberto Antonietti
  16. The Over-Education of UK Immigrants and Minority Ethnic Groups: Evidence from the Labour Force Survey. By Joanne Lindley
  17. Selective Schools and Academic Achievement By Damon Clark
  18. Premature Apprenticeship Terminations: An Economic Analysis By Donata Bessey; Uschi Backes-Gellner
  19. Changing norms about gender inequality in education : evidence from Bangladesh By Das, Maitreyi Bordia; Blunch, Niels-Hugo
  20. Public Provision of Education and Government Spending in Pakistan By Muhammad Akram; Faheem Jehangir Khan
  21. An Economic Analysis of Identity and Career Choice By Maria Knoth Humlum; Kristin J. Kleinjans; Helena Skyt Nielsen
  22. The Problem of Overskilling in Australia and Britain By Kostas Mavromaras; Seamus McGuinness; Nigel O’Leary; Peter Sloane; Yi King Fok
  23. Learning: What and How? An Empirical Study of Adjustments in Human Resource Systems By Avner Ben-Ner; Stephanie Lluis
  24. A Theory of Destructive Entrepreneurship By Sameeksha Desai; Zoltan J. Acs
  25. Introducing Academic Skills in Know-how-based Firms: Innovative Potential or Non-complementarity? By René N. Nielsen

  1. By: Stepán Jurajda (CERGE-EI, CEPR and IZA); Katherine Terrell (University of Michigan, CEPR and IZA)
    Abstract: Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital and labor mobility patterns. The evidence suggests that regions with high inherited skill endowments attract skilled workers as well as FDI. This mobility pattern, which helps explain the lack of convergence in regional unemployment rates, is consistent with the presence of complementarities in skill and capital. Nevertheless, we find no supporting evidence of human capital wage spillovers implied by the complementarities story. Unemployment of the least-skilled workers appears lower in areas with a higher share of college-educated labor and future research is needed to see if this finding as well as the observed migration pattern arise from different adjustments to regional shocks by education level brought about in part by Central European labor-market institutions, such as guaranteed welfare income raising effective minimum wages.
    Keywords: unemployment, human capital, regional labor markets, transition economies, labor mobility, complementarities, spillovers, Czech Republic, Hungary, Romania, Ukraine
    JEL: E24 J0 J61
    Date: 2007–11
  2. By: Lena Nekby (Stockholm University, SULCIS and IZA); Magnus Rödin (Stockholm University, SULCIS); Gülay Özcan (Stockholm University, SULCIS)
    Abstract: This paper explores the identity formation of a cohort of students with immigrant backgrounds in Sweden and the consequences of identity for subsequent educational attainment. Unique for this study is that identity is defined according to a two-dimensional acculturation framework based on both strength of identity to the (ethnic) minority and to the (Swedish) majority culture. Results indicate that integrated men are associated with significantly higher levels of education than assimilated men. No differences in educational attainment are found between the assimilated and the integrated for women. These results put into question the premise of oppositional identities, i.e., a trade-off between ethnic identity and educational achievement, among immigrants in Sweden.
    Keywords: ethnic identity, acculturation, ethnic minorities, education
    JEL: J15 J16 J21 Z13
    Date: 2007–11
  3. By: Vito Peragine (University of Bari); Laura Serlenga (University of Bari and IZA)
    Abstract: This paper proposes a definition of equality of educational opportunities. Then, it develops a comprehensive model that allows to test for the existence of equality of opportunity in a given distribution and to rank distributions according to equality of opportunity. Finally, it provides an empirical analysis of equality of opportunity for higher education in Italy.
    Keywords: equality of opportunity, higher education, stochastic dominance
    JEL: D63 I2 C14
    Date: 2007–11
  4. By: Philippe Aghion (Harvard University); Philippe Askenazy (Paris School of Economics and IZA); Renaud Bourlès (Université de la Méditerranée (GREQAM)); Gilbert Cette (Banque de France (DAMEP) and Université de la Méditerranée (CEDERS)); Nicolas Dromel (CREST-INSEE and Université Cergy-Pontoise (THEMA))
    Abstract: This note investigates the effects of the education level, product market rigidities and employment protection legislation on growth. It exploits macro-panel data for OECD countries. For countries close to the technological frontier, education and rigidities are significantly related to TFP growth. The contribution of the interaction between product market regulation and labour market rigidity seems particularly substantial.
    Keywords: productivity, growth, regulations, market rigidities, education
    JEL: O47 J24 J68 L40 O57
    Date: 2007–11
  5. By: Arnaud Dupuy (ROA, Maastricht University and IZA)
    Abstract: This paper presents a general equilibrium assignment model of workers to tasks with endogenous human capital formation and multidimensionality of skills. The model has 2 key features. First, skills are endogenous and multidimensional. Second, two types of assignment occur, workers self-select their education and firms assign workers to tasks/machines. This assignment model yields two functions mapping skills of each type to tasks. Equilibrium is characterized by different wage functions for each type of skills, so that the wage distributions generally overlap. This model offers a unique framework to analyze changes in the wage structure within and between skills groups of workers and distinguishes between technological change that is related to machines (the technical factor) or related to workers (the human factor). I show both theoretically and through simulations that the model can reproduce simultaneously i) the overlap in the wage distributions of college and high-school graduates, ii) the rise in the college-premium, iii) the rise in within wage inequality iv) the differential behavior of the between and within wage inequality in the 60s and 70s and, v) the decline of the wage at the first decile of the overall wage distribution. A family of closed form solutions for the wage functions is proposed. In this family, the output of worker-task pairs is Cobb-Douglas, tasks are distributed according to a Beta distribution and the mapping functions have a logistic form.
    Keywords: endogenous human capital formation, tasks assignment, substitution, technical change and wage distribution
    JEL: D3 J21 J23 J31
    Date: 2007–11
  6. By: Lilla, Marco (Università Politecnica delle Marche)
    Abstract: The paper attempts to measure income inequality and its changes over the period 1993-2000 for a set of 13 Countries in ECHP. Focusing on wages and incomes of workers in general, inequality is mainly analyzed with respect to educational levels as proxy of individual abilities. Estimation of education premia is performed by quantile regressions to stress differences in income distribution and questioning the true impact of education. The same estimates are used to decompose income inequality and show the rise in residual inequality.
    Keywords: Inequality; Education Premium ; Quantile Regression
    JEL: D31 J24 J31
    Date: 2007–11
  7. By: Wolfgang Steffen; Johannes Stephan
    Abstract: This paper assess determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level by use of a unique database constructed by field work. The determinants tested in a simple econometric regression model are focussed upon the issue of human capital and modern market-oriented management. The results are novel in as much as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis was able to establish that the kind of human capital and expertise mostly needed in the post-socialist firms are related to the particular requirements of a competitive marketbased economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catch-up, as well as the case that the gaps in labour productivity are most importantly rooted in a more labour-intense production, which does not give rise to a competitive disadvantage.
    Keywords: Productivity gap, Central East Europe, East Germany, firm-level analysis 1
    JEL: L6 M2
    Date: 2007–11
  8. By: Mika Maliranta; Rita Asplund
    Abstract: ABSTRACT : We study how upgrading the skills of the personnel affects a firm’s performance. Two different strategies are examined : 1) providing formal training and 2) strategic recruitment and separation policy. The use of register-based longitudinal employer-employee data supplemented with a survey on vocational training provides an opportunity to shed fresh light on the issue and allows us to address the usual econometric problems. We find that internally (but not externally) organized training stimulates subsequent growth of performance but only when combined with the implementation of new process or product technology. Hiring highly skilled workers is initially costly to firms but is productivity-enhancing in the long run.
    Keywords: productivity, profitability, training, education, hiring
    JEL: J24 M5 O3 D2
    Date: 2007–11–16
  9. By: Carmen Pagés (Inter-American Development Bank and IZA); Marco Stampini (Sant’ Anna School of Advanced Studies)
    Abstract: This paper assesses labor market segmentation across formal and informal salaried jobs and self-employment in three Latin American and three transition countries. It looks separately at the markets for skilled and unskilled labor, inquiring if segmentation is an exclusive feature of the latter. Longitudinal data are used to assess wage differentials and mobility patterns across jobs. To study mobility, the paper compares observed transitions with a new benchmark measure of mobility under the assumption of no segmentation. It finds evidence of a formal wage premium relative to informal salaried jobs in the three Latin American countries, but not in transition economies. It also finds evidence of extensive mobility across these two types of jobs in all countries, particularly from informal salaried to formal jobs. These patterns are suggestive of a preference for formal over informal salaried jobs in all countries. In contrast, there is little mobility between self-employment and formal salaried jobs, suggesting the existence of barriers to this type of mobility or a strong assortative matching according to workers’ individual preferences. Lastly, for both wage differentials and mobility, there is no statistical difference across skill levels, indicating that the markets for skilled and unskilled labor are similarly affected by segmentation.
    Keywords: labor mobility, segmentation, barriers to entry, skills, informality, Latin America, transition economies
    JEL: J21 J24 J31 J63
    Date: 2007–11
  10. By: Allen Jim; Grip Andries de (ROA rm)
    Abstract: We analyze whether technological change induces skill obsolescence and early labor market exit, and to what extent lifelong learning reduces these risks. Using panel data on older workers, we find that workers report skill obsolescence more often in jobs in which learning is a structural characteristic. However, perceived skill obsolescence has no significant effect on the probability of losing employment. Instead, workers who experience skill obsolescence participate more often in training, which decreases the risk of losing employment. The results are consistent with the dynamic model of skill obsolescence and employment loss developed in this paper. Moreover, we find that when workers with long job tenures decrease their training participation, this is an early indicator of future job loss.
    Keywords: education, training and the labour market;
    Date: 2007
  11. By: GAYLE ALLARD (Instituto de Empresa); CRISTINA SIMON (Instituto de Empresa)
    Abstract: This study explores the challenge of capturing talent from both the political and the management level in Western Europe. It begins by identifying the special characteristics of Generation Y: those born since 1980 and recently joining national labor forces. It then evaluates the rigidity of labor markets in the European countries, dividing them into most and least regulated and exploring some of the labor-market characteristics that accompany those extremes. Finally, it identifies the employment aspirations of Generation Y, and contrasts them with the realities of young workers on national job markets.
    Keywords: Human Resources, Human talent
    Date: 2007–11
  12. By: Sarah Brown; Gaia Garino; Christopher Martin (Department of Economics, The University of Sheffield)
    Keywords: Firm Performance; Labour Turnover; Quit Rates
    JEL: J21 J23 E3 F4
    Date: 2007–09
  13. By: Montizaan Raymond; Coervers Frank; Grip Andries de (ROA rm)
    Abstract: In this paper we analyze how retirement behavior is affected by a worker’s firm-specific or general training history. Using US data from the National Longitudinal Survey of Older Men and controlling for the effects of technological change and workers’ retirement preferences, we find that workers with a firm-specific training history retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in upward sloping earning profiles that create productivity-wage differentials for older workers.
    Keywords: education, training and the labour market;
    Date: 2007
  14. By: Thomas Cornelißen (Leibniz University Hannover); Christian Pfeifer (Leibniz University Hannover and IZA)
    Abstract: We analyze the impact of exercising sports during childhood and adolescence on educational attainment. The theoretical framework is based on models of allocation of time and educational productivity. Using the rich information from the German Socio-Economic Panel (GSOEP), we apply generalized ordered probit models to estimate the effect of participation in sport activities on secondary school degrees and professional degrees. Even after controlling for important variables and selection into sport, we find strong evidence that the effect of sport on educational attainment is statistically significant and positive.
    Keywords: allocation of time, education, human capital, sport
    JEL: I21 J13 J22 J24
    Date: 2007–11
  15. By: Adriaan Van Zon (Maastricht University); Roberto Antonietti (Università di Padova)
    Abstract: How does the rate at which firms adopt new technologies affect the level of education and training of a country’s workforce? If technological change makes knowledge obsolete and tends to foster general rather than firm-specific skills, what would be the optimum level of education spending in front of a faster arrival of new technologies? This paper tries to answer these questions by developing an endogenous growth model with creative ’wear and tear’ in which general education enhances innovation through R&D and lowers adjustment costs to new technologies, while on-the-job training is necessary for firms to realise their profit potentials by implementing the new technologies and reap all the related future quasi-rents. The paper reproduces some stylized facts on the technology-training relationship and shows how the optimum amount of time devoted to education and job training is affected by the rate of technical change itself. In particular, we find that a faster arrival of innovations shifts the private knowledge portfolio towards general human capital. We also find that households tend to under invest in education, thus leading to lower growth rates than technically feasible, and higher training costs than absolutely necessary. This suggests that there is room for education policy reducing private education fees.
    Keywords: education, on-the-job training, R&D, schooling, technology, wear-and-tear
    JEL: I22 J24 O31 O33
    Date: 2007–11
  16. By: Joanne Lindley (Department of Economics, The University of Sheffield)
    Keywords: Education; over-education, earnings, immigrants, ethnic minorities
    JEL: J24 J7
  17. By: Damon Clark (University of Florida and IZA)
    Abstract: In this paper I consider the impact of attending a selective high school in the UK. Students are assigned to these schools on the basis of a test taken in primary school and, using data on these assignment test scores for a particular district, I exploit this rule to estimate the causal effects of selective schools on test scores, high school course taking and university enrollment. Despite the huge peer advantage enjoyed by selective school students, I show that four years of selective school attendance generates at best small effects on test scores. Selective schools do however have positive effects on course-taking and university enrollment, evidence suggesting they may have important longer run impacts.
    Keywords: selective schools, education, instrumental variables
    JEL: C21 I21
    Date: 2007–11
  18. By: Donata Bessey (Institute for Strategy and Business Economics, University of Zurich); Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: This paper presents empirical evidence on premature terminations of apprenticeship contracts in Germany. Our novel approach uses human capital theory with a regional component as a clear-cut framework for the analysis. It derives testable hypotheses on individual decisions to finish an investment in human capital, namely, their apprenticeship training. Using a German data set, we find some evidence for the appropriateness of our theory, especially with respect to the short-term cost of an apprenticeship. Regional impact factors also seem to have a decisive impact on the decision to drop out from vocational training. We conclude that economic incentives, also long-term ones, seem to play a decisive role in individuals’ decisions whether to finish their training or not.
    Keywords: Apprenticeship training, human capital, regional labor markets
    JEL: J I J
    Date: 2007–08
  19. By: Das, Maitreyi Bordia; Blunch, Niels-Hugo
    Abstract: Using a recent household survey for two cohorts of married women, this paper examines norms about gender equality in education for children and adults. Among the main findings are that gender education gap norms have changed: younger generations of women are more positive about female vs. male education, both as pertaining to child and adult education outcomes. Perhaps the strongest result is that Bangladeshi women are more likely to espouse attitudes of gender equalit y in education for their children and less so about gender equality among spouses. It is also easier to explain norms regarding children ' s education and more difficult to explain norms about equality in marriages. The authors believe that question on relative education of boys and girls captures the value of education per se, while the question on educational equality in marriage captures the norms regarding marriage and the relative worth of husbands and wives. The effect of education in determining norms is significant though complex, and spans own and spousal education, as well as that of older females in the household. This indicates sharing of education norms effects or externalities arising from spousal education in the production of gender education gap norms within marriage as well as arising from the presence of older educated females in the household. Lastly, the authors also find associations between gender education gap norms and household poverty, information processing and religion, though the evidence here is more mixed.
    Keywords: Gender and Development,Population Policies,Primary Education,Gender and Law,Access & Equity in Basic Education
    Date: 2007–11–01
  20. By: Muhammad Akram (International Institute of Islamic Economics, International Islamic University, Islamabad.); Faheem Jehangir Khan (Pakistan Institute of Development Economics, Islamabad)
    Abstract: The study has been carried out to measure the incidence of government spending on education in Pakistan at the provincial (both rural and urban) level, using the primary data of the Pakistan Social Standard Living Measures Survey (PSLM), 2004-2005, and by employing the three-step Benefit Incidence Approach methodology. The paper reviews the national policies emphasising provision of education in Pakistan, as well as the trend in coverage and public sector spending on education facilities in Pakistan. The study examines the inequalities in resource distribution and service provision in relation to the government education expenditure. The rural areas of Pakistan are the more disadvantaged in the provision of the education facilities. Overall, the expenditure on the education sector is progressive, both at the regional and the provincial levels. However, variation exists in the shares of different income groups’ benefit from the provision of educational facilities created by public expenditure.
    Keywords: Education, Public Expenditure, Public Policy, Gini Coefficient, Concentration Coefficient, Benefit Incidence Approach
    JEL: H52 H53 I21 I22 I28 I38 O18
    Date: 2007
  21. By: Maria Knoth Humlum (University of Aarhus); Kristin J. Kleinjans (University of Aarhus); Helena Skyt Nielsen (University of Aarhus and IZA)
    Abstract: Standard economic models which focus on pecuniary payoffs cannot explain why there are highly able individuals who choose careers with low pecuniary returns. Therefore, financial incentives are unlikely to be effective in influencing career choices of these individuals. Based on Akerlof and Kranton (2000), we consider a model of career choice and identity where individuals derive non-pecuniary identity payoffs. Using factor analysis on a range of attitude questions, we find two factors related to identity (career orientation and social orientation), which are important for educational choices. The implication is that policymakers and institutions of higher education need to focus on identity related issues rather than just improved financial incentives if they aim at attracting the high ability youth to occupations with excess demand for labor.
    Keywords: career choice, choice of higher education, identity, self-image
    JEL: I21
    Date: 2007–10
  22. By: Kostas Mavromaras (University of Melbourne and IZA); Seamus McGuinness (ESRI, Dublin); Nigel O’Leary (University of Swansea); Peter Sloane (University of Swansea and IZA); Yi King Fok (University of Melbourne)
    Abstract: This paper examines the parallel trends in education and labour market developments in Australia and Britain. It uses unique information in the WERS and HILDA surveys on reported overskilling in the workplace. To a degree, the overskilling information overcomes the problem of unobserved ability differences and focuses on the actual job-employee mismatch more than the conventional overeducation variables can. The paper finds that the prevalence of overskilling decreases with education at least for Australia, but the wage penalty associated with overskilling increases with education. Although the general patterns of overskilling (prevalence and penalties) are fairly similar between Australia and Britain, the problem appears to be greater in Britain.
    Keywords: overskilling, overeducation, Australia, Britain
    JEL: J24 J31
    Date: 2007–11
  23. By: Avner Ben-Ner; Stephanie Lluis
    Abstract: What information do firms use when they design their organizational structure? How do they learn what direction they should take? Generally, firms may learn from their own experiences and outcomes, as well as those of other firms. In the economics literature, learning from these sources has been investigated in conjunction with three theoretical strands: learning-by-doing, matching theory, and social learning. We construct a conceptual framework that incorporates these three strands and develop hypotheses about the effects of various factors on learning about adjusting one important element of organizational structure, the human resources system. We concentrate on four systems: traditional (the simplest system), decision-making oriented, financial-incentives oriented, and high-performance (the most complex system). The hypotheses regard (1) the effects of learning-by-doing on adoption of more or less complex systems, (2) the shape of the performance-experience learning curves associated with different systems, (3) the match between perceived organizational capabilities and the degree of complexity of human resource systems, (4) the influence of other firms‘ systems and the performance associated with them on a firm‘s adjustment of its system, (5) the effect of a firm‘s location on its adjustment decisions, and (6) the effects of various factors on the speed with which firms adjust their systems. We use a unique panel dataset of firms in Minnesota and obtain a rich set of findings: organizational learning is multifaceted; learning by doing one system helps with other systems; we replicate the famous learning curve only for the complex human resources system; firms use changes in their performance as signals of their capabilities; and firms learn from other firms‘ experiences. Larger and higher-wage firms learn faster to cope with complex systems, older firms learn slower, and firms located near a major metropolitan center adjust faster to more complex systems. JEL classification: D83, L25, M54
    Keywords: Learning-by-doing, Matching, Social learning, Organizational Adjustments, Human Resources
  24. By: Sameeksha Desai (Max Planck Institute of Economics and George Mason University); Zoltan J. Acs (George Mason University and Max Planck Institute of Economics)
    Abstract: Policy interest since the early 1980s has focused in different ways on the creation of a large, productive, taxable economy - in which entrepreneurship plays a role for employment, income growth and innovation. The current understanding of various forms of entrepreneurship remains incomplete, focusing largely on productive and unproductive entrepreneurship. However, destructive entrepreneurship plays an important role in many, if not most, economies. This paper addresses the conceptual gap in the allocation of entrepreneurship by proposing a theory of destructive entrepreneurship.
    Keywords: destructive entrepreneurship, allocation of entrepreneurship, rent-seeking, rent-destroying, incentives, institutions, property rights, contractual enforcement, conflict, social capital, trust, ethnic capital
    JEL: O17 O20 P00
    Date: 2007–11–12
  25. By: René N. Nielsen
    Abstract: This paper contributes with two new findings to the literature on how universities contribute to industrial development. First, it argues and substantiates quantitatively through logistic regression models that introduction of academically skilled graduates in small, know-how-based firms can be instrumental in spurring innovation and upgrading changes in the firms. Second, it argues and substantiates quantitatively that it is not just graduates with technical and natural scientific qualifications that can contribute positively. Graduates with other academic qualifications also hold potential for innovation and upgrading changes in the firms, especially when it comes to major organisational changes. Qua these findings the paper contributes to the literature in two ways. It is a contribution to and substantiation of the ‘broader’ view arguing that universities contribute to industrial development with more than directly applicable information and technologies. And, academically skilled graduates are not only relevant in technological R&D departments of science-based firms.
    Keywords: Science; Academic research; Skilled graduates; Innovation; Technological change; Organisational change
    JEL: D83 I23 J24 O31 O33
    Date: 2007

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