nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒01‒19
fourteen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Age-dependent Effects of Socio-economic Background on Educational Attainment - Evidence from Germany By Wolter Hassink; Hannah Kiiver
  2. The Changing Role of Family Income and Ability in Determining Educational Achievement By Philippe Belley; Lance Lochner
  3. A Demand-Supply Analysis of the Spanish Education Wage Premium in the 1980s and 1990s. By Manuel A. Hidalgo
  5. The Population Cycle Drives Human History - from a Eugenic Phase into a Dysgenic Phase and Eventual Collapse By Weiss, Volkmar
  6. Screening Tests, Information, and the Health-Education Gradient By Ciro Avitabile; Tullio Jappelli; Mario Padula
  7. The Poor, the Rich and the Enforcer: Institutional Choice and Growth By Thor Koeppl; Cyril Monnet; Erwan Quintin
  8. Interethnic Marriage Decisions: A Choice between Ethnic and Educational Similarities By Delia Furtado; Nikolaos Theodoropoulos
  9. Higher education funding reforms in England: the distributional effects and the shifting balance of costs By Lorraine Dearden; Emla Fitzsimons; Alissa Goodman; Greg Kaplan
  10. Skill-Biased Effects of Service Offshoring in Western Europe. By Rosario Crinò
  11. The Role of Poverty and Community Norms in Child Labor and Schooling Decisions By Strulik, Holger
  13. Human capital, externalities and tourism: three unexplored sides of the impact of FT affiliation on primary producers By BECCHETTI LEONARDO; COSTANTINO MARCO; PORTALE ELISA
  14. Privatization of Knowledge: Did the U.S. Get It Right? By Guido Cozzi; Silvia Galli

  1. By: Wolter Hassink; Hannah Kiiver
    Abstract: The impact of socio-economic background on a child's educational attainment has been discussed as a static concept so far. Existing economic literature as well as the psychology of education literature point however towards a dynamic process where the impact of socio-economic background depends on the age of the child. We explore this possibility using German micro-data. Using instrumental variable methods we estimate the causal effects of parental education and household income on school success of a child at two points in time of his school career. The estimates indicate that household income has a more important effect on the educational success of children in a more advanced point during the education while the effect of parental education seems to be stable.
    Keywords: school choice, demand for schooling, human capital
    JEL: I22 J13 J62
    Date: 2007–12
  2. By: Philippe Belley (University of Western Ontario); Lance Lochner (University of Western Ontario)
    Abstract: This paper uses data from the 1979 and 1997 National Longitudinal Survey of Youth cohorts (NLSY79 and NLSY97) to estimate changes in the effects of ability and family income on educational attainment for youth in their late teens during the early 1980s and early 2000s. Cognitive ability plays an important role in determining educational outcomes for both NLSY cohorts, while family income plays little role in determining high school completion in either cohort. Most interestingly, we document a dramatic increase in the effects of family income on college attendance (particularly among the least able) from the NLSY79 to the NLSY97. Family income has also become a much more important determinant of college 'quality' and hours/weeks worked during the academic year (the latter among the most able) in the NLSY97. Family income has little effect on college delay in either sample. To interpret our empirical findings on college attendance, we develop an educational choice model that incorporates both borrowing constraints and a 'consumption' value of schooling -- two of the most commonly invoked explanations for a positive family income -- schooling relationship. Without borrowing constraints, the model cannot explain the rising effects of family income on college attendance in response to the sharply rising costs and returns to college experienced from the early 1980s to early 2000s: the incentives created by a 'consumption' value of schooling imply that income should have become less important over time (or even negatively related to attendance). Instead, the data are more broadly consistent with the hypothesis that more youth are borrowing constrained today than were in the early 1980s.
    Date: 2008
  3. By: Manuel A. Hidalgo (Department of Economics, Universidad Pablo de Olavide)
    Abstract: We estimate the demand for education in Spain, and use the estimated demand curve to analyze whether the evolution of the education wage premium in the 1980s and 1990s can be explained by a demand-supply framework. We find that growth in the demand for education in the 1980s was very similar to growth in the 1990s. Our empirical results show that difference in the evolution of the education wage premium between the two decades can be explained by combining observed changes in labor supply with steady labor demand growth.
    Keywords: wage premium, relative demand, relative supply
    JEL: J24 J31 O33
    Date: 2008–01
  4. By: Bernarda Zamora (Universidad de Alicante)
    Abstract: This paper formally describes the Human Capital Theory as a Research Programme that fits into the classical economic Research Programmes. The fundamental ¿hard core¿ assumption which converts the Human Capital Theory into a Research Programme itself in Lakatosian terms is based upon the embodiment of the human capital in the person investing in it. The paper shows how the auxiliary ¿protective belt¿ assumptions and the empirical content of the theory are linked to and derived from the ¿hard core¿ assumptions in such a way that the Human Capital Theory satisfies the conditions to be considered a Scientific Research Programme.
    Keywords: Lakatos, Research Programme, Human Capital.
    JEL: B41 J24
    Date: 2007–12
  5. By: Weiss, Volkmar
    Abstract: In the period before the onset of demographic transition, when fertility rates were positively associated with income levels, Malthusian pressure gave an evolutionary advantage to individuals whose characteristics were positively correlated with child quality and hence higher IQ, increasing in such a way the frequency of underlying genes in the population. As the fraction of individuals of higher quality increased, technological progress intensified. Positive feedback between technological progress and the level of education reinforced the growth process, setting the stage for an industrial revolution that facilitated an endogenous take-off from the Malthusian trap. The population density rose and with it social and political friction, especially important at the top of the social pyramid. Thus, from a certain turning point of history, the well-to-do have fewer children than the poor. Once the economic environment improves sufficiently, the evolutionary pressure weakens, and on the basis of spreading egalitarian ideology and general suffrage the quantity of people gains dominance over quality. At present, we have already reached the phase of global human capital deterioration as the necessary prerequisite for a global collapse by which the overpopulated earth will decimate a species with an average IQ, still too mediocre to understand its own evolution and steer its course.
    Keywords: IQ; Dysgenics; Democracy; Poverty; Francis Galton; Darwinism; Fertility; Demographic transition; Human capital
    JEL: N3 J1 O4
    Date: 2007–07–10
  6. By: Ciro Avitabile (University College London, IFS, University of Salerno and CSEF); Tullio Jappelli (Università di Napoli, CSEF and CEPR); Mario Padula (Università di Venezia, and CSEF)
    Abstract: The association between health outcomes and education – the health-education gradient - is widely documented but little is known about its source. Using microeconomic data on a sample of individuals aged 50+ in eight European countries, we find that education and cognitive skills (such as numeracy, fluency, and memory) are associated with a greater propensity for standard screening tests (mammography and colonoscopy). However, the association is much weaker for people who have access to good health quality information, as proxied by a direct measure of the quality of general practitioners. We interpret this result as evidence in favor of the hypothesis that the positive health-education gradient is driven, at least in part, by information barriers rather than such other factors, as individual resources or preferences.
    Keywords: Health, education, information
    JEL: I0 I1 I2
    Date: 2008–01–02
  7. By: Thor Koeppl (Queen's University); Cyril Monnet (Federal Reserve Bank of Philadelphia); Erwan Quintin (Federal Reserve Bank of Dallas)
    Abstract: We study economies where improving the quality of institutions – modeled as improving contract enforcement – requires resources, but enables trade that raises output by reducing the dispersion of marginal products of capital. We find that in this type of environment it is optimal to combine institutional building with endowment redistribution, and that more ex-ante dispersion in marginal products increases the incentives to invest in enforcement. In addition, we show that institutional investments lead over time to a progressive reduction in inequality. Finally, the framework we describe enables us to formalize the hypothesis formulated by Engerman and Sokoloff (2002) that the initial concentration of human and physical capital can explain the divergence of different countries’ institutional history.
    Keywords: Enforcement as a Choice, Institutions, Inequality, Human and Physical Capital
    JEL: D31 D52 O11 O43
    Date: 2007–12
  8. By: Delia Furtado (University of Connecticut); Nikolaos Theodoropoulos (University of Cyprus)
    Abstract: This paper examines the effect of education on intermarriage and specifically, whether the mechanisms through which education affects intermarriage differ by immigrant generation and race. We consider three main paths through which education affects marriage choice. First, educated people may be better able to adapt to different customs and cultures making them more likely to marry outside of their ethnicity. Second, because the educated are less likely to reside in ethnic enclaves, meeting potential spouses of the same ethnicity may involve higher search costs. Lastly, if spouse-searchers value similarities in education as well as ethnicity, then they may be willing to substitute similarities in education for ethnicity when evaluating spouses. Thus, the effect of education will depend on the availability of same-ethnicity potential spouses with a similar level of education. Using U.S. Census data, we find evidence for all three effects for the population in general. However, assortative matching on education seems to be relatively more important for the native born, for the foreign born that arrived at a fairly young age, and for Asians. We conclude by providing additional pieces of evidence suggestive of our hypotheses.
    Keywords: Ethnic intermarriage, Education, Immigration
    JEL: J12 I21 J61
    Date: 2007–12
  9. By: Lorraine Dearden (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London); Emla Fitzsimons (Institute for Fiscal Studies); Alissa Goodman (Institute for Fiscal Studies); Greg Kaplan (Institute for Fiscal Studies)
    Abstract: <p><p>This paper undertakes a quantitative analysis of substantial reforms to the system of higher education (HE) finance in England, first announced in 2004 and revised in 2007. The reforms introduced deferred fees for HE, payable by graduates through the tax system via income-contingent repayments on loans subsidised by the government. The paper uses lifetime earnings simulated by the authors to consider the likely distributional consequences of the reforms for graduates. It also considers the costs of the reforms for taxpayers, and how the reforms are likely to shift the balance of funding for HE between the public and private sectors.</p></p>
    Date: 2007–10
  10. By: Rosario Crinò (CESPRI - Bocconi University, Milan, Italy.)
    Abstract: This paper studies the e¤ects of service offshoring on the skill composition of labor demand in Western Europe, using comparable data for nine economies during the 1990s. A short-run translog cost function allows derivation of demand elasticities for three labor inputs. Potential endogeneity and measurement error in service offshoring are accounted for by using instruments based on EBRD indexes of telecommunication reform in Eastern Europe. Results show that service offshoring is skill-biased, because it raises relative labor demand for high skilled workers.
    Keywords: Service Offshoring, Labor Demand, Instrumental Variable Estimation.
    JEL: F16 J23 J31
    Date: 2007–10
  11. By: Strulik, Holger
    Abstract: Household poverty is a powerful motive for child labor and working frequently comes at the expense of schooling for children. Accounting for these natural links we investigate whether and when there is an additional role for community norms and how the social evaluation of schooling evolves over time. The proposed model provides an explanation for why equally poor villages or regions display different attitudes towards schooling and why children who are not working are not sent to school either but remain idle instead. The conditions for a successful implementation of a half-day school vs. a full-day school are investigated. An extension of the model explores how an education contingent subsidy paid to the poorest families of a community manages to initiate a bandwagon effect towards an equilibrium where all children are sent to school.
    Keywords: School Attendance, Child Labor, Social Norms, Targeted Transfers
    JEL: I20 I29 J13 O12
    Date: 2008–01
  12. By: Gabriel Romero (Universidad de Alicante)
    Abstract: In the brain drain literature models with heterogeneous agents typically predict that all agents who get tertiary education will try to migrate. Hence, the skill composition of the migration flow is the same as that of the skilled population left behind. This result, however, may not represent the migration pattern of some source countries. In this paper I present and analyze a model of heterogeneous agents where immigrants go through an assimilation process upon arriving to the host country. I start by studying the skill composition of the migration flow of a less advanced country. Then, I characterize conditions that lead a benevolent government to promote migration among the skilled population. I show that the government may promote skilled migration despite the fact that the brain drain decreases per capita income.
    Keywords: Assimilation process, brain drain, and migration pattern.
    JEL: F22 I28 J24
    Date: 2007–12
    Abstract: We evaluate the impact of fair trade (FT) affiliation on a sample of around 250 producers from two different fair trade projects which widely differ in terms of average FT affiliation and local standard of living. On the descriptive side we find evidence of two types of externalities (FT affiliates have higher bargaining power also with local intermediaries and, in one project but not in the other, FT improves conditions also of local non FT affiliates). The FT price premium (difference between FT and traditional importers price) is substantial even though “ethical travelers” pay a price even higher than FT importers. On the econometric side we observe that, in both projects, producers’ income, weekly food consumption expenditure, the non food consumption share on total income, self evaluated relative standard of living and professional self esteem are significantly and positively correlated with affiliation years. Through its impact on consumption share and relative standard of living fair trade is also shown to have indirect significant effects on producers’ life satisfaction. We also find weaker but significant effects of fair trade affiliation on last year savings, while we do not observe significant differences between the treatment and control sample in terms of wealth proxies. Finally, with backast panel data we reconstruct farmers yearly decisions to send their children to school and find that FT affiliation has a significant and positive effect on them when children are between 15 and 18. The effect is stronger in the project in which producers have higher standard of living.
    Date: 2007–12
  14. By: Guido Cozzi; Silvia Galli
    Abstract: Brilliant ideas are key to economic growth. They often emerge from scienti…c discoveries with no immediate commercial value so rewards may not be aligned to e¤ort. Should basic research be publicly or privately funded? And, to foster innovation and growth, what kinds of discovery should be protected? Post 1980, the US intellectual property institutions facilitated the patentability of basic research. The European and other patenting regimes are slowly changing in the same direction, also encouraged by TRIPs. Did the US choose the better path? We build a Schumpeterian model to re-assess this important turning point.
    Keywords: R&D and Growth, Sequential Innovation, Research Tools, Patent Laws, Kremer Mechanism
    JEL: O31 O34 O41

This nep-hrm issue is ©2008 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.