nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒01‒05
twenty-one papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Uncertainty and the Specificity of Human Capital By Martin Gervais; Igor Livshits; Césaire Meh
  2. Using Human Capital Theory to Establish a Potential Income Tax By Dagney Faulk; Jorge Martinez-Vazquez; Sally Wallace
  3. Religion, attitudes towards working mothers and women’s labor market participation: Evidence for Germany, Ireland, and the UK By Guido Heineck
  4. Intergenerational Transmission of Educational Attainment in Germany - the Last Five Decades By Guido Heineck; Regina T. Riphahn
  5. The Impact of Participation in Sports on Educational Attainment : New Evidence from Germany By Thomas Cornelißen; Christian Pfeifer
  6. It Takes Three to Tango in Employment: Matching Vocational Education, Organizations and Students and Companies in Labour market By Mika Maliranta; Satu Nurmi; Hanna Virtanen
  7. Educational Expansion and Its Heterogeneous Returns for Wage Workers By Michael Gebel; Friedhelm Pfeiffer
  8. Does Money Buy Higher Schooling? : Evidence from Secondary School Track Choice in Germany By Marcus Tamm
  9. A gendered assessment of the brain drain By FrŽdŽric, DOCQUIER; B. Lindsay, LOWELL; Abdeslam, MARFOUK
  10. Selection into financial literacy programs: evidence from a field study By Stephan Meier; Charles Sprenger
  11. Employment and Education Policy for Young People in the EU: What Can New Member States Learn from Old Member States? By Francesco Pastore
  12. Economic Gains from Publicly Provided Education in Germany By Joachim R. Frick; Markus M. Grabka; Olaf Groh-Samberg
  13. Analyzing the Labor Market Activity of Immigrant Families in Germany By Leilanie Basilio; Thomas K. Bauer; Mathias Sinning
  14. Education and Health in G7 Countries: Achieving Better Outcomes with Less Spending By Stéphane Carcillo; Victoria Gunnarsson; Marijn Verhoeven
  15. Migrant Networks, Migrant Selection, and High School Graduation in Mexico By Alfonso Miranda
  16. Comparing alternative instruments to measure service quality in higher education By Ana Oliveira-Brochado; Rui Cunha Marques
  17. Labour market outcomes after vocational training in Germany : equal opportunities for migrants and natives? By Burkert, Carola; Seibert, Holger
  18. Ethnic Environment during Childhood and the Educational Attainment of Immigrant Children in Sweden By Bygren, Magnus; Szulkin, Ryszard
  19. Improving Incentives in Tertiary Education in Belgium By Jens Høj
  20. The Importance of Observing Early School Leaving and Usually Unobserved Background and Peer Characteristics in Analysing Academic Performance By Guyonne Kalb; Sholeh A. Maani
  21. Environment, Human Development and Economic Growth after Liberalisation: An Analysis of Indian States By Mukherjee, Sacchidananda; Chakraborty, Debashis

  1. By: Martin Gervais; Igor Livshits; Césaire Meh
    Abstract: This paper studies the choice between general and specific human capital. A trade-off arises because general human capital, while less productive, can easily be reallocated across firms. Accordingly, the fraction of individuals with specific human capital depends on the amount of uncertainty in the economy. Our model implies that while economies with more specific human capital tend to be more productive, they also tend to be more vulnerable to turbulence. As such, our theory sheds some light on the experience of Japan, where human capital is notoriously specific: while Japan benefited from this predominately specific labor force in tranquil times, this specificity may also have been at the heart of its prolonged stagnation.
    Keywords: Economic Models
    JEL: J24 J41 J62 D92
    Date: 2007
  2. By: Dagney Faulk; Jorge Martinez-Vazquez (Andrew Young School of Policy Studies); Sally Wallace (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: There are good arguments for an individual income tax on “potential income”, but the drawback to such a tax is the significant administrative concern regarding the implementation of the tax. This paper argues that human capital theory provides a widely accepted and straightforward method to estimate “potential income” using observed characteristics of individuals, and operationalizes this approach using data for the U.S.A. The paper also suggests that a “potential income tax” is very similar to a “presumptive income tax.” The paper concludes by reviewing some significant problems with the implementation of a potential/presumptive income tax.
    Keywords: Human Capital, Potential Income Tax, presumptive income tax
    Date: 2007–06–01
  3. By: Guido Heineck (University of Erlangen-Nuremberg. Department of Statistics and Empirical Economics)
    Abstract: Religion as a determinant of individuals’ behavior has only recently found its way in the economic literature. In this analysis, four waves of ISSP-data covering the time between 1991 and 2002 are used to examine the relationship between religion and attitudes towards working mothers across (West and East) Germany, Ireland, and the UK. Further, using sub-samples of married individuals, the study addresses whether these attitudes along with religious involvement are related to wives’ labor market participation. Results suggest that religious affiliation and participation correlate positively with traditional attitudes and that those attitudes are negatively associated with female labor participation. Beyond that, religion has only modest additional explaining power.
    Keywords: Attitudes, religion, female labor participation
    JEL: J16 J22 Z12
    Date: 2007–12–19
  4. By: Guido Heineck; Regina T. Riphahn
    Abstract: Over the last decades the German education system underwent numerous reforms in order to improve "equality of opportunity", i.e. to guarantee all pupils equal access to higher education. At the same time internationally comparative evidence yields that Germany features particularly low intergenerational mobility with respect to educational attainment. This study investigates the development in intergenerational education mobility in Germany for the birth cohorts 1929 through 1978 and tests whether the impact of parental background on child educational outcomes changed over time. In spite of massive public policy interventions and education reforms our results yield no significant reduction in the role of parental background for child outcomes over the last decades.
    Keywords: education transmission, intergenerational mobility, schooling, human capital transmission, Lohnungleichheit, Einkommensgleichung, Quantilsregression
    JEL: I21 I28 J11
    Date: 2007
  5. By: Thomas Cornelißen; Christian Pfeifer
    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
  6. By: Mika Maliranta; Satu Nurmi; Hanna Virtanen
    Abstract: ABSTRACT : We examine the determinants of labour market status after the initial vocational basic education (ISCED 3) by use of unique linked register data on students, their parents, teachers, educational organisations and business companies in Finland. We distinguish between four outcomes : 1) employment 2) further studies 3) non-employment and 4) drop-out. The explanatory factors are classified into three main groups : the characteristics of 1) the educational organisation and their institutions, 2) the students and 3) the local business conditions. Teaching expenditures do not matter but teachers’ skills do. Parental background plays a central role. Local business development matters for boys.
    Keywords: education production, vocational education, employability, further studies, regional development, drop-out
    JEL: H52 I21 J23 J24
    Date: 2007–12–21
  7. By: Michael Gebel; Friedhelm Pfeiffer
    Abstract: The paper examines the evolution of returns to education in the West German labour market over the last two decades. During this period, graduates from the period of educational expansion in the sixties and seventies entered the labour market and an upgrading of the skill structure took place. In order to tackle the issues of endogeneity of schooling and its heterogeneous returns we apply two estimation methods: Wooldridge’s (2004) approach that relies on conditional mean independence and Garen’s (1984) control function approach that requires an exclusion restriction. For the population of workers from the GSOEP, we find that both approaches produce estimates of average returns to education that decrease until the late 1990s and increase significantly afterwards. In the observation period, the gender gap in returns to education seems to vanish. Furthermore, we find that the so called “baby boomer” cohort has the lowest average return to education in young ages. However, this effect disappears when they become older.
    Keywords: Educational expansion, correlated random coefficient model, heterogenous returns to education, conditional mean independence
    JEL: J21 J24 J31
    Date: 2007
  8. By: Marcus Tamm
    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 or preferences.
    Keywords: Child poverty, educational attainment, secondary schools, sibling differences, natural experiment
    JEL: D31 I21 J13
    Date: 2007
  9. By: FrŽdŽric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); B. Lindsay, LOWELL; Abdeslam, MARFOUK
    Abstract: This paper updates and extends the Docquier-Marfouk data set on international migration by educational attainment. We use new sources, homogenize definitions of what a migrant is, and compute gender-dissaggregated indicators of the brain drain. Emigration stocks and rates are provided by level of schooling and gender for 195 source countries in 1990 and 2000. Our data set can be usded to capture the recent trend in womenÕs brain drain and to analyze its causes and consequences for developing countries. We show that women represent an increasing share of the OECD immigration stock and exhibit relatively higher rates of brain drain than men. The gender gap in skilled migration is strongly correlated with the gender gap in educational attainment at origin. Equating womenÕs and menÕs access to education would probably reduce gender differences in the brain drain.
    Keywords: Brain drain, Gender, Human capital, Migration
    JEL: F22 J61
    Date: 2007–12–14
  10. By: Stephan Meier; Charles Sprenger
    Abstract: As financial literacy has been shown to correlate with good financial decisions, policymakers promote educational programs to improve individuals’ financial decisions. But who selects into educational programs and who acquires information about personal finance? This paper, in a field study with more than 870 individuals, offers individuals free information about their credit reports (and credit scores). About 55 percent choose to participate in this small counseling program. To test whether those who self-select to acquire information about personal finance differ from those who do not on (normally) unobservable characteristics, we elicit time preferences, using incentivized choice experiments. Our results show that the two groups differ sharply in their discount factors: those who choose to acquire information do not discount the future as much as those who choose not to acquire information. This result has implications for financial education programs.
    Keywords: Financial literacy ; Human behavior
    Date: 2007
  11. By: Francesco Pastore (Seconda Università di Napoli and IZA)
    Abstract: The EU experience with youth unemployment has changed over recent years with the launch and re-launch of the Lisbon Strategy and the Bologna process. A dramatic shift has taken place from the 1990s emphasis on labour market flexibility as a tool to abate youth long term unemployment to the more recent stress on the importance of increasing the human capital endowment via a deep reform of education and training systems. This shift is also taking place worldwide, since, as recent studies show, labour market flexibility can increase employability when the human capital level of young people is sufficiently high. To reduce the "experience gap" between young and adult people, the education systems should become of a higher quality, more inclusive to reduce the dropout rate, homogeneous to other EU countries to favour labour mobility, flexible to allow young people to better find the best match, and contemplate the duality principle, by providing training together with education, to favour smoother school-to-work transitions. Apprenticeships schemes, fiscal incentives to hire the youth unemployed as well as on-the-job training schemes should help reach objectives that cannot be guaranteed simply via an increase in labour market flexibility.
    Keywords: Lisbon strategy, employment policy, young people, economic transition
    JEL: I2 J24 J68 P3
    Date: 2007–12
  12. By: Joachim R. Frick; Markus M. Grabka; Olaf Groh-Samberg
    Abstract: The aim of this paper is to estimate income advantages arising from publicly provided education and to analyse their impact on the income distribution in Germany. Using representative micro-data from the SOEP and considering regional and education-specific variation, from a cross-sectional perspective the overall result is the expected levelling effect. When estimating the effects of accumulated educational transfers over the life course within a regression framework, however, and controlling for selectivity of households with children as potential beneficiaries of educational transfers, we find evidence that social inequalities are increasing from an intergenerational perspective, reinforced in particular by public transfers for non-compulsory education, thus negating any social equalisation effects achieved within the compulsory education framework.
    Keywords: Education, Public Transfers, Income Distribution, Economic Wellbeing, SOEP
    Date: 2007
  13. By: Leilanie Basilio; Thomas K. Bauer; Mathias Sinning
    Abstract: This paper analyzes whether immigrant families facing credit constraints adopt a family investment strategy wherein, upon arrival, an immigrant spouse invests in host country-specific human capital while the other partner works to finance the family's current consumption. Using data for West Germany, we do not find evidence for such a specialization strategy. We further examine the labor supply and wage assimilation of families whose members immigrated together relative to families whose members immigrated sequentially. Our estimates indicate that this differentiation is relevant for the analysis of the labor market activities of migrant households.
    Keywords: International migration, assimilation, family investment hypothesis
    JEL: D10 F22 J22
    Date: 2007
  14. By: Stéphane Carcillo; Victoria Gunnarsson; Marijn Verhoeven
    Abstract: Enhancing the efficiency of education and health spending is a key policy challenge in G7 countries. The paper assesses this efficiency and seeks to establish a link between differences in efficiency across countries and policy and institutional factors. The findings suggest that reforms aimed at increasing efficiency need to take into account the nature and causes of inefficiencies. Inefficiencies in G7 countries mostly reflect lack of cost effectiveness in acquiring real resources, such as teachers and pharmaceuticals. We also find that high wage spending is associated with lower efficiency. In addition, lowering student-teacher ratios is associated with reduced efficiency in the education sector, while immunizations and doctors' consultations coincide with higher efficiency in the health sector. Greater autonomy for schools seems to raise efficiency in secondary education.
    Keywords: Education , Health care , Wages , Public sector , Government expenditures ,
    Date: 2007–11–21
  15. By: Alfonso Miranda (Keele University and IZA)
    Abstract: This paper examines whether family and community migration experience affect the probability of high school graduation in Mexico once unobserved heterogeneity is accounted for. Bivariate random effects dynamic probit models for cluster data are estimated to control for the endogeneity of education and migrant network variables. Correlation of unobservables across migration and education decisions as well as within groups of individuals such as the family are explicitly controlled for. Results show that migrant networks reduce the likelihood of high school graduation. Negative migrant selection is detected at the individual level while positive migrant selection is found at the family level.
    Keywords: migration, education, migrant selection, dynamic bivariate probit
    JEL: F22 I21 J61 C35
    Date: 2007–12
  16. By: Ana Oliveira-Brochado (EDGE – Faculdade de Economia do Porto, CESUR, DECIVIL-IST, Universidade Técnica de Lisboa); Rui Cunha Marques (CESUR, DECIVIL-IST – Universidade Técnica de Lisboa)
    Abstract: The purpose of this work is to examine the performance of five alternative measures of service quality in the high education sector – SERVQUAL (Service Quality), Importance-weighted SERVQUAL, SERVPERF (Service Performance), Importance-weighted SERVPERF and HedPERF (Higher Education Performance). We aim at determining which instrument has the superior measurement capability. Data were collected by means of a structured questionnaire containing perception items enhanced from the SERVPERF and HEdPERF scales and expectation items from the SERVQUAL scale, both modified to fit into the higher education sector. The first draft of the questionnaire was subject to a pilot testing through a focus group and an expert evaluation. Data were gathered from a 360 students’ sample of a Portuguese university in Lisbon. Scales were compared in terms of unidimensionality, reliability, validity and explained variance. Managerial conclusions were also drawn.
    Keywords: service quality scales; higher education; reliability
    JEL: C10 C42
    Date: 2007–12
  17. By: Burkert, Carola (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Seibert, Holger (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "German in-firm vocational training combines training on the job and learning in vocational schools. The so called 'dual system' absorbs roughly two thirds of German school leavers every year. After between two and four years of standardized training, it provides them with a generally accepted qualification in a wide range of occupations. Using Spence's Signaling Theory, hypotheses are derived concerning different labour market outcomes of foreigners who successfully completed an in-firm vocational training course and their German counterparts. The integration potential of the dual system is tested empirically according to its risk factors unemployment, occupational mismatch and skill mismatch using longitudinal registration data (1977-2004). Different nationalities are compared with Germans with respect to their first employment after leaving the dual system. Today, most of the young migrants who go through the dual system are as successful on the labour market as Germans. In-firm vocational training apparently provides migrant youth with the skills and techniques necessary for a successful transition to the labour market. However, they have restricted transition chances due to having higher unemployment rates, occupational mismatch and skill mismatch. But even if we control for relevant variables that determine transition chances, restrictions at labour market entry still remain for individual nationalities: compared to Germans, migrant men and especially migrant women have a higher risk of unemployment and occupational mismatch." (author's abstract, IAB-Doku) ((en))
    Keywords: Jugendliche, ausländische Jugendliche, berufliche Integration, betriebliche Berufsausbildung, Arbeitsmarktchancen
    JEL: J62 J64 J71
    Date: 2007–12–18
  18. By: Bygren, Magnus (Stockholm University Linnaeus Center for Integration Studies - SULCIS); Szulkin, Ryszard (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: We ask whether growing up with persons of the same national background (which we refer to as coethnics), in the immediate neighbourhood, influences future educational careers of children of immigrants. We use administrative data to follow an entire cohort of immigrant children who graduated from Swedish compulsory schools in 1995. We have information on their parents and on their ethnic environment during the period they were 10 – 15 years old. The dependent variable studied is the highest completed education in years at age 24. We are able to account for unobserved heterogeneity with neighbourhood fixed effects and ethnic group fixed effects. We find that the effect of the quantitative side of the ethnic environment (the number of coethnics) on educational attainment is strongly conditioned by the qualitative side of this environment (the educational success of coethnics). The individual’s educational career is positively related to the number of young coethnics in the neighbourhood, but only if they can be characterized as being educationally successful. Growing up in a large ethnic community with average or poor educational success is harmful for the future educational success. The effect of the ethnic surrounding on the highest completed education is fully mediated by success in compulsory school.
    Keywords: Ethnic enclaves; education; neighborhood effects
    JEL: I20 I21 J15
    Date: 2007–12–19
  19. By: Jens Høj
    Abstract: The tertiary education system has been transformed from an elite-oriented system to a system providing tertiary education to a much larger share of each new generation. This re-orientation has contributed to raising education attainment in Belgium. However, in many respects the organisation of the tertiary education systems has not been changed fundamentally and economic incentives are only to a minor extent in place for securing the supply and quality of tertiary education. The system has come under strain, as revealed in the high failure rate among first-year students and the high incidence of subject change. There is thus a need for the system to adapt to be able to continue to support the improvement in educational attainment. <P>Améliorer les systèmes d’incitation dans l’enseignement supérieur en Belgique <BR>Auparavant élitiste, l’enseignement supérieur a été transformé en un système devant permettre à une part plus importante de chaque nouvelle génération de faire des études supérieures. Cette réorientation a contribué à élever le niveau de formation en Belgique. Cela étant, à bien des égards, l’organisation du système d’enseignement supérieur n’a pas été fondamentalement modifiée et les conditions économiques permettant d’assurer une offre et une qualité d’enseignement suffisantes sont loin d’être réunies. Le système est en proie à des difficultés, comme en témoigne le taux d’échec élevé des étudiants de première année et les nombreux changements de filière. Il doit donc faire l’objet d’aménagements si l’on veut qu’il puisse continuer à améliorer le niveau de formation.
    Keywords: enseignement supérieur, higher education
    JEL: F21 F22 F23
    Date: 2007–12–20
  20. By: Guyonne Kalb (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Sholeh A. Maani (Department of Economics, The University of Auckland)
    Abstract: In this paper, we use a recent panel data set from New Zealand to examine the link between the academic performance and the decision by teenagers to drop out of school before exams at the end of year 10. These choices have significant lifetime economic impacts, since early school leaving in many cases closes pathways to further education. We address endogeneity and error correlation of potential performance in national examinations and school-leaving choices prior to exams. Birth month provides an instrument used in the equation for drop out, because those born in particular months can legally leave school before the exam takes place, whereas the other students cannot. The analyses incorporate the effect of academic ability (childhood IQ), parental education, family resources at different points in time while the child is growing up, and school and peer characteristics. The results show that those who drop out early are unlikely to have performed well in the exam. The predicted difference between those who drop out or continue, at least up to their exam, is almost completely explained by observed factors. Leaving out those variables which are often not available in other datasets (such as childhood IQ, childhood family resources and teenage peer effects), we find that the unobserved factors in academic performance and early school leaving are correlated. It is found that beyond childhood IQ and family resources, teenage peer and school factors have additional and significant associations with grade outcomes. This has important policy implications.
    Date: 2007–02
  21. By: Mukherjee, Sacchidananda; Chakraborty, Debashis
    Abstract: Economic growth does not necessarily ensure environmental sustainability for a country. The relationship between the two is far more complicated for developing countries like India, given the dependence of a large section of the population on natural resources for livelihood. Under this backdrop, the current study attempts to analyze the relationships among Environmental Quality (EQ), Human Development (HD) and Economic Growth (EG) for 14 major Indian States during post liberalisation period (1991-2004). Further, for understanding the changes in EQ with the advancement of economic liberalisation, the analysis is carried out by dividing the sample period into two: Period A (1990–1996) and Period B (1997–2004). For both the sub-periods, 63 environmental indicators have been clustered under eight broad environmental groups and an overall index of EQ using the HDI methodology. The EQ ranks of the States exhibit variation over time, implying that environment has both spatial and temporal dimensions. Ranking of the States across different environmental criteria (groups) show that different States possess different strengths and weaknesses in managing various aspects of EQ. The HDI rankings of the States for the two periods are constructed by the HDI technique following the National Human Development Report 2001 methodology. We attempt to test for the Environmental Kuznets Curve hypothesis through multivariate OLS regression models, which indicate presence of non-linear relationship between several individual environmental groups and per capita net state domestic product (PCNSDP). The relationship between EQ and economic growth however does not become clear from the current study. The regression results involving individual environment groups and HDI score indicate a slanting N-shaped relationship. The paper concludes that individual States should adopt environmental management practices based on their local (at the most disaggregated level) environmental information. Moreover, since environmental sustainability and human well-being are complementary to each other, individual States should attempt to translate the economic growth to human well-being.
    Keywords: Environmental Quality; Economic Liberalisation; Economic Growth; Human Development; India.
    JEL: Q50 O10 O15 O13 Q24 Q01 Q25 O1 I2 Q40 O4 I10
    Date: 2007–07

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