nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒04‒15
fifteen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Educational Attainment, Growth and Poverty Reduction within the MDG Framework: Simulations and Costing for the Peruvian Case By Gustavo Yamada; Juan F. Castro; Arlette Beltran; Maria A. Cardenas
  2. The impact of entrepreneurship education on entrepreneurship competencies and intentions: An evaluation of the Junior Achievement Student Mini-Company Program By Hessel Oosterbeek; Mirjam van Praag; Auke IJsselstein
  3. Individual Entrepreneurship Capacity and Performance of SMEs By Leitão, João; Franco, Mário
  4. Human Capital Externalities in Western Germany By Daniel F. Heuermann
  5. The Capital Asset Pricing Model: An Application on the Efficiency of Financing Higher Public Education in Egypt By Nevine Mokhtar Eid
  6. Private Returns to Education in Ghana: Implications for Investments in Schooling and Migration By Sackey
  7. The Nature of Credit Constraints and Human Capital By Lance J. Lochner; Alexander Monge-Naranjo
  8. The coordination between education and employment policies By Alka obadić; Sanja Porić
  9. Women’s Liberation: What’s in It for Men? By Doepke, Matthias; Tertilt, Michèle
  10. Growth, inequality and poverty during a process of institutional change By Pasquale Tridico
  11. Does Product Market Competition Decrease Employers’ Training Investments? – Evidence from German Establishment Panel Data By Katja Görlitz; Joel Stiebale
  12. Does Quality Matter in Labour Input? The Changing Pattern of Labour Composition in New Zealand By Kam Leong Szeto; Simon McLoughlin
  13. Improving Student Skills in Essay Writing and Oral Presentations By Tiffany Hutcheson
  14. Effects of Learning-by-doing, technology-adoption costs and wage inequality By Rui Leite; Óscar Afonso
  15. Training Disadvantaged Youth in Latin America: Evidence from a Randomized Trial By Orazio Attanasio; Adriana Kugler; Costas Meghir

  1. By: Gustavo Yamada; Juan F. Castro; Arlette Beltran; Maria A. Cardenas
    Abstract: We propose a model that accounts for the potential feedback between schooling performance, human capital accumulation and long run GDP growth, and links these results with poverty incidence. Our simulation exercise takes into account targets for education indicators and GDP growth itself (as arguments in our planner's loss function) and provides two conclusions: (i) with additional funds which amount to 1 percent of GDP each year, public intervention could, by year 2015, add an extra 0.89 and 1.80 percentage points in terms of long-run GDP growth and permanent reduction in poverty incidence, respectively; and (ii) in order to engineer an intervention in the educational sector so as to transfer households the necessary assets to attain a larger income generation potential in the long run, we need to extend the original set of MDG indicators to account for access to higher educational levels besides primary education.
    Keywords: Millennium development goals, education, human capital, GDP growth, poverty, Peru
    JEL: O41 I32 C25 C41 C61
    Date: 2008
  2. By: Hessel Oosterbeek; Mirjam van Praag (Max Planck Institute for Economics, Jena); Auke IJsselstein
    Abstract: Both the European Community, its member countries and the United States have stimulated schools to implement entrepreneurship programs into schooling curricula on a large scale, based on the idea that entrepreneurial competencies and mindsets must be developed at school. The leading and acclaimed worldwide program is the Junior Achievement Student Mini-Company Program. Nevertheless, so far, its effects on students? entrepreneurship competencies and attitudes have not been evaluated. This paper analyzes the impact of the program in a Dutch college using an instrumental variables approach in a difference-in-differences framework. The results show that the program does not have the intended effects: students? self-assessed entrepreneurial skills remain unaffected and students? intentions to become an entrepreneur even decrease significantly.
    Keywords: Entrepreneurship education, program evaluation, entrepreneur competencies, entrepreneur intentions
    JEL: A20 C31 H43 H75 I20 J24 L26
    Date: 2008–03–26
  3. By: Leitão, João; Franco, Mário
    Abstract: This paper analyses the importance of human capital and organizational capital on the determination of SME’s performance, by proposing and testing a conceptual model about Individual Entrepreneurship Capacity, and its impact both on non-economic and economic performance. This constitutes an innovative approach in the sense that uses information collected at the individual level, that is, the entrepreneur. Moreover, it constitutes a first attempt for facing the caveat in the literature on the relationship among types of capital and entrepreneurial performance. A model where the individual entrepreneurship capital is defined as a function of two types of capital: Human and Organizational; is proposed and empirically tested. For the Human Capital we consider three dimensions: (a) Individual Characteristics; (b) Managerial Push; and (c) Managerial Pull. As concerns the Organizational Capital, four dimensions are considered: (i) Individual Entrepreneurial Behavior; (ii) Collective Entrepreneurial Behavior; (iii) Managerial Practices; and (iv) Organizational Culture (in terms of the Superstructure and the Socio-Structure). The use of the stepwise method provides the selection of significant variables that impact on SME’s performance. When only non-economic indicators are considered for measuring the performance, in what respects the human capital we find out that the only significant variable is: enthusiasm at work. In what concerns the organizational capital the significant variables are: efficient organizational structure; participative management; incentives for interdisciplinary discussion and dialogue; and frequent meetings of working groups. For its turn, when economic indicators are considered for measuring the performance, we find out that the significant human capital determinants are: entrepreneur’s intuition; and propensity for innovating activities. In terms of organizational capital determinants we reveal that the significant variables are: efficient organizational structure; and use of external indicators for improving entrepreneurial performance. The main policy implication of the paper is the possibility of creating, at an individual level, new incentives and motivational tools based on the identification of the most important variables of human capital and organizational capital, for fostering SME’s performance.
    Keywords: Human Capital; Organizational Capital; Performance; SME.
    JEL: L25 D23 L26
    Date: 2008–04–09
  4. By: Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: The paper sheds light on the impact of spatial agglomeration of human capital on individual wages in Western Germany. Using panel data it shows that regional wage differentials are to a large extent attributable to localized human capital externalities arising from the regional share of highly qualified workers. Employing the regional number of public schools and of students as instrumental variables the paper shows that human capital externalities are underestimated in ordinary panel regressions for wages of highly qualified and non-highly qualified workers alike due to supply shifts of highly qualified workers. An analysis by sector reveals that human capital externalities are more pronounced in manufacturing than in the service sector. We find indication that highly qualified workers benefit from intra-industry knowledge spillovers, while non-highly qualified workers profit from pecuniary externalities between industries. Our findings are stable among a variety of indicators of regional human capital and robust to the inclusion of other sources of increasing returns, as well as wage curve, price level, and amenity effects.
    Keywords: Human Capital Externalities, Agglomeration, Urban Wage Premium
    JEL: D62 D83 J24 J31 O15
    Date: 2008–03
  5. By: Nevine Mokhtar Eid (Faculty of Management Technology, The German University in Cairo)
    Abstract: In the Markowitz (1952) mean-variance model as well as the Capital Asset Pricing Model of Sharpe (1964) and Lintner (1965) agents make their investment decisions based solely on the expected return and variance. On the other hand, human capital theory does not consider uncertainty in its return function except recently initiated by Harmon et al. (2001) who distinguish between the level and the years of education and incorporate uncertainty in Mincer’s Model (1974). This study has twofold objectives: First, estimate the risk-return trade-off of the public higher education capital stock in Egypt to indirectly evaluate the performance of its current financing system, and second, investigate the inter-linkage between real investment (human) and financial investment (lost opportunity or access to funds), then draw the channel through which they can affect the economic growth.
    Keywords: Human capital investment, financial capital investment, capital asset pricing model
    JEL: G11 G11 H21
    Date: 2008–03
  6. By: Sackey
    Abstract: This study examines the determinants of school attendance and attainment in Ghana with a view to deriving implications for policy direction. Using micro-level data from the Ghana living standards surveys, our gender disaggregated probit models on current schoolattendance and attainment show that parental education and household resources are significant determinants of schooling. The effect of household resources on current schoolattendance is higher for daughters than it is for sons. It appears that for male and female children the impact of household resources on school attendance has reduced, statistically speaking. Father’s schooling effects on the education of female children decreased between 1992 and 1999. Mother’s schooling effects on school attendance of daughtersin 1992 were not significantly different from those realized in 1999. However, the effects of mother’s schooling levels on school attendance of male children appear to have reduced. Other significant determinants of children’s schooling are the age of children, school infrastructure, religion and urban residency. The paper concludes that education matters and has an intergenerational impact. Arguably, sustainable poverty reduction approaches cannot ignore the role of education and implications for employment, earnings and social development. Hence, gender sensitive policies to ensure educational equity are vital.
    Date: 2008–01
  7. By: Lance J. Lochner; Alexander Monge-Naranjo
    Abstract: This paper studies the nature and impact of credit constraints in the market for human capital. We derive endogenous constraints from the design of government student loan programs and from the limited repayment incentives in private lending markets. These constraints imply cross-sectional patterns for schooling, ability, and family income that are consistent with U.S. data. This contrasts with the standard exogenous constraint model, which predicts a counterfactual negative ability -- schooling relationship for low-income youth. We show that the rising empirical importance of familial wealth and income in determining college attendance (Belley and Lochner 2007) is consistent with increasingly binding credit constraints in the face of rising tuition costs and returns to schooling. Our framework also explains the recent increase in private credit for college as a market response to the rising returns to school.
    JEL: H81 I22 I28
    Date: 2008–04
  8. By: Alka obadić (Faculty of Economics and Business, University of Zagreb); Sanja Porić
    Abstract: At the end of the 20th century, knowledge production has been radically transformed. As knew knowledge economies and US were becoming an increasing threat for EU, the Lisbon Strategy was set to treat the economic problems that EU is facing. This article discusses and evaluates the potential of the Lisbon Agenda and presents the ways how growth in GDP per capita and employability could be increased by synchronized education and employment policies. It is widely believed that jobs are becoming more and more demanding of skills and as a result workers need to upgrade their skills or risk loosing out in the competition for jobs in the new economy. The research confirms that the reason why many of these unemployed workers might be considered "unemployable in a modern economy" is their comparatively low level of education. Employment rates rise with educational attainment and higher educated individuals also face a more stable labour market than lower educated individuals. The research concludes that in situation of stable higher unemployment rates and higher demand for specific labour skills it is obvious that the coordination between employment and education policies is needed. To ensure employability, policies for promoting education and lifelong learning have to be adjusted to changes in the economy and society.
    Keywords: Lisbon Agenda, employment policy, education policy, lifelong learning, EU
    JEL: I2 J21 J64
    Date: 2008–03–31
  9. By: Doepke, Matthias (University of California, Los Angeles); Tertilt, Michèle (Stanford University)
    Abstract: The nineteenth century witnessed dramatic improvements in the legal rights of married women. Given that these changes took place long before women gained the right to vote, they amounted to a voluntary renouncement of power by men. In this paper, we investigate men’s incentives for sharing power with women. In our model, women’s legal rights set the marital bargaining power of husbands and wives. We show that men face a tradeoff between the rights they want for their own wives (namely none) and the rights of other women in the economy. Men prefer other men’s wives to have rights because men care about their own daughters and because an expansion of women’s rights increases educational investments in children. We show that men may agree to relinquish some of their power once technological change increases the importance of human capital. We corroborate our argument with historical evidence on the expansion of women’s rights in England and the United States.
    Keywords: women's rights, political economy, human capital, return to education, economic growth
    JEL: D13 E13 J16 N30 O43
    Date: 2008–03
  10. By: Pasquale Tridico (Università degli Studi Roma Tre, Dipartimento di Economia)
    Abstract: This paper aims first of all to explore the social sustainability and the quality of economic growth in a sample of 50 Emerging and Transition Economies (ETEs), which are countries experiencing a process of fast growth and institutional change in most cases. Through a series of cross-country regressions, using OLS models, the paper assesses the type of development in those countries. Economic growth during 1995-2006 is regressed against poverty, inequality and human development variables. The main findings are that growth did not reduce poverty and that income inequality, measured as a reduction of Gini coefficient between the years 1993-2004, worsened too. From one side, economic growth in ETEs occurred despite the worsening of income inequality. However, this result does not identify a “U-shaped” Kuznets curve because even after a consistent period of economic growth, inequality did not decrease and it remained at higher levels. Only countries with higher education levels and public expenditure in strategic dimensions seem to escape from this trap. On the other side, economic growth occurred at the expense of an important human development variable i.e., life expectancy, and at the expense an important indicator of political democracy, i.e., Voice and Accountability.
    Keywords: development, inequality, poverty, institutions
    JEL: O10 O15 I32 P52
    Date: 2008
  11. By: Katja Görlitz; Joel Stiebale
    Abstract: Using a large panel data set of German manufacturing establishments, this paper investigates the impact of competition on training incidence as well as on the number of trained workers. According to theory, one would expect a negative relationship between product market competition and firms’ incentives to invest in employees’ general skills (Gersbach and Schmutzler 2006). In our empirical analysis, product market competition is approximated by various measures of competition such as the Herfindahl Index, the number of firms at the 3-digit industry level and the price cost margin. After controlling for unobserved heterogeneity across industries and establishments, there is no significant effect of competition on training. This result is robust towards different samples, model specifications and estimation techniques.
    Keywords: Training, human capital, product market competition
    JEL: J24 L22 D43 C23
    Date: 2008–03
  12. By: Kam Leong Szeto; Simon McLoughlin (The Treasury)
    Abstract: The composition of the New Zealand workforce has changed considerably over the past two decades. Qualification levels have risen, labour force participation has trended upwards for women, immigrants have increasingly been sourced from Asia, and the large baby-boom cohort has contributed to an ageing of the workforce. The question is whether such compositional changes have affected the quality of labour. Our estimates show a large rise in labour quality since 1988 as a result of increasing qualification levels, particularly at university degree level. With age as a proxy for work experience, an ageing of the workforce also contributed to rising labour quality. The annual rise in labour quality averaged 0.6% from 1988 to 2005, which was comparable to the experience of Australia, the United States and the euro area. Although labour quality rose in every year of our sample period, the rise was not constant over time. The increase was much stronger in the first half of the period (1988 to 1997) than in the second half (1997 to 2005). By drawing a large number of lower-skilled people into work, the strength of recent employment growth may have dampened growth in labour quality. Accounting for changes in labour quality has implications for labour productivity. Almost half of labour productivity growth of 1.4% per annum since 1988 can be attributed to the rise in labour quality. Labour productivity measured as output per quality-adjusted working hour rose by 0.8% per annum on average from 1988 to 2005, with annual growth of 0.5% in the first half of the period and 1.1% in the second half.
    Keywords: Labour Quality; Human Capital; Wage Differentials; Labour Productivity
    JEL: J21 J24 J31 J61
    Date: 2008–04
  13. By: Tiffany Hutcheson (School of Finance and Economics, University of Technology, Sydney)
    Abstract: In most subjects that students complete as part of a Business or Commerce degree they are typically assessed by way of submitting a written essay and sitting for an exam. A student should be able to show in their written essay that they understand topics covered in the subject and have gained knowledge whilst writing the essay. Unfortunately, lecturers have found that the standard of a large number of written essays submitted by both undergraduate and postgraduate students can be fairly poor and display varying degrees of plagiarism. When marking an essay it is often difficult to know whether a student actually understands what they have written in their essay. This occurs in essays written by local students as well as essays written by overseas students whose first language is not English. Students are often informed in their subject guides and lectures about the University assistance provided on essay writing and plagiarism; however it appears that they do not necessarily take up this assistance. This paper evaluates the impact in a business postgraduate subject of replacing the written essay component of assessment with a shorter written essay and requiring students do an oral presentation of their answer to the class. The students are provided with resources on assignment writing that provide assistance with essay writing and referencing as well as preparation and giving of an oral presentation. A quantitative analysis is undertaken to see whether the use of the assignment writing resources by students had an impact on their assignment mark and also if had an impact on the level of plagiarism found in the written assignments.
    Keywords: plagiarism; written essay; oral presentation
    JEL: A20 A23
    Date: 2008–04–01
  14. By: Rui Leite (Faculdade de Economia, Universidade do Porto, Portugal); Óscar Afonso (CEMPRE and Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: In the dominant literature, the technological-knowledge bias that drives wage inequality is determined by the market-size channel. We develop an endogenous growth model with two technologies in which: a specific quality of labour, low or high-skilled, is combined with a specific set of quality-adjusted intermediate goods; the market-size channel is practically removed; adoption costs and learning-by-doing are linked with labour endowments. By solving transitional dynamics numerically, we show that changes in the supply of labour affect learning-by-doing and technology-adoption costs, which, in turn, influence the technological-knowledge bias and thus wage inequality. The proposed mechanisms can accommodate facts not explained by the previous literature.
    Keywords: Learning-by-doing; Adoption costs; Technological-knowledge bias; Wage inequality; Numerical simulations
    JEL: C61 J31 O31 O33
    Date: 2008–04
  15. By: Orazio Attanasio; Adriana Kugler; Costas Meghir
    Abstract: Youth unemployment in Latin America is exceptionally high, as much as 50% among the poor. Vocational training may be the best chance to help unemployed young people at the bottom of the income distribution. This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005 on the employment and earnings of trainees. This is one of a couple of randomized training trials conducted in developing countries and, thus, offers a unique opportunity to examine the causal impact of training in a developing country context. We use originally collected data on individuals randomly offered and not offered training. We find that the program raises earnings and employment for both men and women, with larger effects on women. Women offered training earn about 18% more than those not offered training, while men offered training earn about 8% more than men not offered training. Much of the earnings increases for both men and women are related to increased employment in formal sector jobs following training. The benefits of training are greater when individuals spend more time doing on-the-job training, while hours of training in the classroom have no impact on the returns to training. Cost-benefit analysis of these results suggests that the program generates a large net gain, especially for women.
    JEL: C21 I38 J24
    Date: 2008–04

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