nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒06‒07
seventeen papers chosen by
Fabio Sabatini
University of Siena

  1. Return Migration as a Channel of Brain Gain By Karin Mayr; Giovanni Peri
  2. Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-Paid Jobs: The Spanish Case By Blázquez Cuesta, Maite; Ramos, Jose
  3. The Role of Firm Size in Training Provision Decisions: evidence from Spain By Laia Castany
  4. Publicly provided private goods: education and selective vouchers By Piolatto, Amedeo
  5. Why Do Firms Train Apprentices? The Net Cost Puzzle Reconsidered By Mohrenweiser, Jens; Zwick, Thomas
  6. Entrepreneurship, Innovation and Economic Growth:The Case of Yangtze River Delta in China By Zheng, Jianghuai; Hu, Zhining; Wang, Jialing
  7. Health, Human Capital, and African American Migration Before 1910 By Trevon D. Logan
  8. Specific capital and vintage effects on the dynamics of unemployment and vacancies By Burcu Eyigungor
  9. Migrants as second-class workers in urban China? A decomposition analysis By Sylvie Démurger; Marc Gurgand; Li Shi; Yu Ximing
  10. When should I leave school? - Optimal timing of leaving school under uncertainty and irreversibility By Natasha Bilkic; Thomas Gries; Margarethe Pilichowski
  11. Local Public Funding of Higher Education when Students and Skilled Workers are Mobile By Thomas Lange
  12. Early Labour Market Returns to College Subjects By Buonanno, Paolo; Pozzoli, Dario
  13. The effect of minimum wages on immigrants' employment and earnings By Pia M. Orrenius; Madeline Zavodny
  14. Managing a Societies Knowledge base A look at Opportunity Costs By Khumalo, Bhekuzulu
  15. HRM Practices and Knowledge Processes Outcomes: Empirical Evidence from a Quasi-Experiment on UK SMEs in the Tourism Hospitality and Leisure Sector By Andreas Georgiadis; Christos N. Pitelis
  16. Propriété immobilière et déqualification dans l’emploi By Carole Brunet; Nathalie Havet
  17. Cluster Development and Knowledge Exchange in Supply Chain By Pradorn Sureephong; Nopasit Chakpitak; Laurent Buzon; Abdelaziz Bouras

  1. By: Karin Mayr; Giovanni Peri
    Abstract: Recent theoretical and empirical studies have emphasized the fact that the prospect of international migration increases the expected returns to skills in poor countries, linking the possibility of migrating (brain drain) with incentives to higher education (brain gain). If emigration is uncertain and some of the highly educated remain, such a channel may, at least in part, counterbalance the negative effects of brain drain. Moreover, recent empirical evidence seems to show that temporary migration is widespread among highly skilled migrants (such as Eastern Europeans in Western Europe and Asians in the U.S.). This paper develops a simple tractable overlapping generations model that provides an economic rationale for return migration and which predicts who will migrate and who will return among agents with heterogeneous abilities. We use parameter values from the literature and the data on return migration to simulate the model and quantify the effects of increased openness on human capital and wages of the sending countries. We find that, for plausible values of the parameters, the return migration channel is very important and combined with the incentive channel reverses the brain drain into significant brain gain for the sending country.
    JEL: F22 J61 O15
    Date: 2008–05
  2. By: Blázquez Cuesta, Maite (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Ramos, Jose (Universidad Europea de Madrid)
    Abstract: General education and training are major forces determining earnings. According to the human capital model, wage differentials among individuals over the life-cycle are largely the result of different patterns of investment in human capital. This paper is intended to analyze the effects of recent investments in human capital – general education, vocational/training or language courses - on workers’ relative earnings and on the probability of making an upwards transition in the earnings distribution. The analysis is done for Spain, using the European Community Household Panel (1995-2001). Our results reveal that having been recently in education or training (mainly vocational/training courses) significantly increases the probability of escaping from low pay to better paid jobs, while decreases the risk of falling into low-wage employment. Furthermore, this positive effect is significantly higher among those workers with a third level of general education completed. A separate analysis for females also reveals these positive returns of recent investments in human capital relative earnings, although in this case they appear to be none statistically significant.
    Keywords: Education; on-the-job training; low pay; bivariate probit
    JEL: C33 J24 J31
    Date: 2008–05
  3. By: Laia Castany (Universitat de Barcelona)
    Abstract: The level of training provided by small firms to their employees is below that provided by their larger counterparts. The provision of firm-related training is believed to be associated to certain characteristics of the firm. In this paper we argue that small firms provide fewer training opportunities as they are less likely to be associated with these characteristics than large firms. The suitability of estimating training decisions as a double-decision process is examined here: first, a firm has to decide whether to provide training or not and, second, having decided to do so, the amount of training to provide. The differences in training provision between small and large firms are decomposed in order to analyse the individual contribution of these characteristics to explaining the gap. The results show that small firms face greater obstacles in accessing training and that the main reasons for that are related to their technological activity and the geographical scope of the market in which they operate.
    Keywords: Continuous training, Firm size, Innovative activity
    JEL: J21 L11 M53 L25
    Date: 2008–05
  4. By: Piolatto, Amedeo
    Abstract: The literature on vouchers often concludes that a vouchers-based system cannot be the outcome of a majority vote. This paper shows that, when the value of vouchers and who is entitled to receive them are fixed exogenously, the majority of voters are in favour of selective vouchers. On top of that, as long as the introduction of vouchers does not undermine the existence of the public school system, introducing selective vouchers induces a Pareto improvement. Middle class agents are the only one using vouchers in equilibrium, while the poorest agents in the economy profit from the reduction in public school congestion.
    Keywords: public economics; education; vouchers; voting
    JEL: H42 I2 D70
    Date: 2008
  5. By: Mohrenweiser, Jens; Zwick, Thomas
    Abstract: This paper investigates the short-term costs and benefits of apprenticeship training in Germany. It calls into question the popular stylised fact that apprenticeship training always leads to net costs during the apprenticeship period. We analyse the impact of the proportion of different occupational groups of apprentices on firm performance. We use representative matched employer–employee panel data that allow us to correct for different sources of estimation bias. We show that the proportion of apprentices in trade, commercial, craft and construction occupations has a direct positive impact on firm performance: the companies cover their training costs immediately. In contrast, companies with apprentices in the manufacturing occupations face net training costs during the apprenticeship period but gain by the long-term employment of its graduate apprentices.
    Keywords: apprenticeship training, performance, panel data estimation
    JEL: C33 D24 J24
    Date: 2008
  6. By: Zheng, Jianghuai; Hu, Zhining; Wang, Jialing
    Abstract: This paper firstly discusses why the economic growth in the Yangtze River Delta has been slowed down recently and suggests a need totransform the current input-based economic growth pattern into aninnovation-based one. Next, through our theoretical analysis, we find that the change of current economic growth pattern is just the innovative reallocationof production factors, and the new economic growth driven by innovation is mainly initiated by the transmutation of entrepreneurship. Finally, we test our belief with real-world evidence. It shows that the Delta has formed a mechanism in which entrepreneurship and human capital mutually promote each other. However, the interactive relationship between R&D expenditure and entrepreneurship has not been developed in general. In addition, excessive government interventions will do harm to the growth of entrepreneurs and economic development.
    Keywords: entrepreneurship; innovation and economic growth pattern
    JEL: O31
    Date: 2008–01–07
  7. By: Trevon D. Logan
    Abstract: This is the first paper to document the effect of health on the migration propensities of African Americans in the American past. Using both IPUMS and the Colored Troops Sample of the Civil War Union Army Data, I estimate the effects of literacy and health on the migration propensities of African Americans from 1870 to 1910. I find that literacy and health shocks were strong predictors of migration and the stock of health was not. There were differential selection propensities based on slave status - former slaves were less likely to migrate given a specific health shock than free blacks. Counterfactuals suggest that as much as 35% of the difference in the mobility patterns of former slaves and free blacks is explained by differences in their human capital, and more than 20% of that difference is due to health alone. Overall, the selection effect of literacy on migration is reduced by one-tenth to one-third once health is controlled for. The low levels of human capital accumulation and rates of mobility for African Americans after the Civil War are partly explained by the poor health status of slaves and their immediate descendants.
    JEL: I1 I2 J1 J2 N3
    Date: 2008–05
  8. By: Burcu Eyigungor
    Abstract: In a reasonably calibrated Mortensen and Pissarides matching model, shocks to average labor productivity can account for only a small portion of the fluctuations in unemployment and vacancies (Shimer (2005a)). In this paper, the author argues that if vintage specific shocks rather than aggregate productivity shocks are the driving force of fluctuations, the model does a better job of accounting for the data. She adds heterogeneity in jobs (matches) with respect to the time the job is created in the form of different embodied technology levels. The author also introduces specific capital that, once adapted for a match, has less value in another match. In the quantitative analysis, she shows that shocks to different vintages of entrants are able to account for fluctuations in unemployment and vacancies and that, in this environment, specific capital is important to decreasing the volatility of the destruction rate of existing matches.
    Keywords: Unemployment
    Date: 2008
  9. By: Sylvie Démurger (GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France); Marc Gurgand (Paris School of Economics and Crest,France); Li Shi (School of Economics and Business, Beijing Normal University, China); Yu Ximing (School of Finance,Renmin University of China, Beijing, China)
    Abstract: In urban China, urban resident annual earnings are 1.3 times larger than long term rural migrant earnings as observed in a nationally representative sample in 2002. Using microsimulation, we decompose this difference into four sources, with particular attention to path dependence and statistical distribution of the estimated effects: (1) different allocation to sectors that pay different wages (sectoral effect); (2) hourly wage disparities across the two populations within sectors (wage effect); (3) different working times within sectors (hours effect); (4) different population structures (population effect). Although sector allocation is extremely contrasted, with very few migrants in the public sector and very few urban residents working as self-employed, the sectoral effect is not robust to the path followed for the decomposition. We show that the migrant population has a comparative advantage in the private sector: increasing its participation into the public sector does not necessarily improve its average earnings. The opposite holds for the urban residents. The second main finding is that population effect is significantly more important than wage or hours effects. This implies that the main source of disparity is pre-market (education opportunities) rather than on-market.
    Keywords: chinese labor market, discrimination, earnings differentials, migration
    JEL: J31 J71 O15 P23
    Date: 2008
  10. By: Natasha Bilkic (University of Paderborn); Thomas Gries (University of Paderborn); Margarethe Pilichowski (University of Paderborn)
    Abstract: Education is a sequence of risky investments in human capital over a long period of time. At each moment a student decides to leave school and enter the labor market, or stay in the education system. Their departure from school will eventually determine their academic attainment level. Therefore, the major purpose of this paper is to derive a timing rule for leaving school and thus answer the question: How long should I go to school? To solve this problem we apply the real option approach. Real option theory offers a different perspective of the human capital investment decision under uncertainty and irreversibility. As future income is uncertain, we model future earnings as a continuous stochastic process. We use dynamic programming techniques to derive an income threshold at which a student should finally leave school irreversibly, and we determine the expected optimal duration of education. Unlike other approaches using real option theory we are able to provide a full analytical discussion of various determinants affecting the timing decision to start work. Among other things, we find that an increasing initial income differential, and the expected income growth extend the duration of education. Education costs and future income risk reduce the years of schooling.
    Keywords: human capital theory, uncertainty, irreversibllity, optimal stopping
    JEL: J24 I2 D8
    Date: 2008–05
  11. By: Thomas Lange (University of Konstanz, ifo Institute for Economic Research Munich & University of Paderborn)
    Abstract: The interregional mobility of high skilled workers might induce an underinvestment in local public higher education when sub-federal entities independently decide on education expenditures to maximize local output. This well-known result is due to interregional spillovers and provides a justification for coordinated education policy or rather a federal intervention. However, things might change completely when taking into account the interregional mobility of students. Now, local education expenditures not only affect labor migration (through wage differentials) but also student migration flows. The model in this paper then shows that local output maximization does not necessarily imply underprovision of higher education, since regions now have an incentive to attract students as future human capital. The stay rates of graduates in equilibrium and the sensitivity of wages to migration are key determinants of local policy. Furthermore, results depend on local government objectives or rather the weighting of natives relative to foreigners. Therefore, the paper also considers natives’ preferred local policy.
    Keywords: higher education, student mobility, labor mobility, local public finance
    JEL: I22 J61 H77
    Date: 2008–05
  12. By: Buonanno, Paolo (Dipartimento di Scienze Economiche); Pozzoli, Dario (Department of Economics, Aarhus School of Business)
    Abstract: This paper aims at estimating early labour market outcomes of Italian university graduates across college subjects. We devote great attention to endogenous selection issues using alternative methods to control for potential self-selection associated with the choice of the degree subject in order to unravel the causal link between college major and subsequent outcomes in the labour market. Our results suggest that “quantitative” fields (i.e. Sciences, Engineering and Economics) increase not only the speed of transition into the first job and employment probability but also early earnings, conditional on employment.
    Keywords: University to work transition; College subject; Self-selection; Returns to education
    JEL: C34 I21 J24
    Date: 2008–05–01
  13. By: Pia M. Orrenius; Madeline Zavodny
    Abstract: This study examines how minimum wage laws affect the employment and earnings of low-skilled immigrants and natives in the U.S. Minimum wage increases might have larger effects among low-skilled immigrants than among natives because, on average, immigrants earn less than natives due to lower levels of education, limited English skills, and less social capital. Results based on data from the Current Population Survey for the years 1994?2005 do not indicate that minimum wages have adverse employment effects among adult immigrants or natives who did not complete high school. However, low-skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum.
    Keywords: Immigrants ; Minimum wage ; Human capital ; Education ; Wages ; Employment
    Date: 2008
  14. By: Khumalo, Bhekuzulu
    Abstract: As explained in the paper namely, “Measuring a Societies Knowledge base”, it is not difficult to measure the knowledge base of a society, though it would be very laborious and time consuming. Knowledge is simply all the laws of existence a society knows plus all the products that a society creates. Each law that a society knows was given the symbol of point X and each product that a society made was given the symbol point U. Point U being a derivative of the laws of existence that we know. Every product in existence represents a point U, and every product is a derivation of what we understand about the laws of existence. We make spoons out of steel, wood, or plastic rather than cotton, paper, or mercury because of the properties that human beings understand the different materials. From the most simple point U to the most complex, all are derivatives of laws of existence that humans understand. From a simple point U like a tooth pick made of thorns to the most complex such as a nuclear powered submarine, all are derived from what human beings understand about the materials.
    Keywords: point X; point U; opportunity Cost; managing knowledge; choice; incentive
    JEL: D81 A20 O22 A10 O21
    Date: 2007–10
  15. By: Andreas Georgiadis; Christos N. Pitelis
    Abstract: This paper presents empirical evidence of the relationship between human resources practicesand the effectiveness of a firm to capitalise on investment in knowledge as measured by thereturns to innovation and business development expenditure. The empirical design is basedon exploiting a natural experiment provided by a policy intervention that offers humanresources-related support to small and medium sized enterprises in the UK TourismHospitality and Leisure sector. Our findings suggest that businesses that receive support onthe area of staff training and development, in HR planning and in staff recruitment andretention generate 100%, 86% and 134% more revenue per pound spend on innovation andbusiness development compared to firms that do not receive such services. Thus, in contrastto existing empirical studies in the field, this evidence supports a strong causal link betweenhuman resources and knowledge processes and sheds some light on the "black box" thatdescribes the strategic logic between human resource management and firm performance.
    Keywords: Human resources, innovation and business development expenditure, policy evaluation
    JEL: M12 M50
    Date: 2008–02
  16. By: Carole Brunet (GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France); Nathalie Havet (GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France)
    Abstract: Homeownership and job downgrading : our empirical study stems from previous research on the effects of residential status on microeconomic labour market outcomes. It focuses on employees and assesses the a priori ambiguous impact of homeownership on downgrading. We use the French data set of the 1995-2001 European Household Panel Survey to build a statistical measure of wage downgrading and a subjective measure of overeducation. We estimate a recursive bivariate probit that simultaneously models the residential status choice and its impact on the probability to be in a downgraded/overeducated job. Our results show that homeowners are, ceteris paribus, more wage downgraded and overeducated than renters. Consequently, homeownership could be a source of mismatch between workers and jobs on the labour market.
    Keywords: job matching, overeducation, residential status, wage downgrading
    JEL: C35 J4 R21
    Date: 2008
  17. By: Pradorn Sureephong (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - Université Claude Bernard - Lyon I - Université Lumière - Lyon II - Institut National des Sciences Appliquées de Lyon, CAMT - College of Arts, Media and Technology - Chiang Mai University); Nopasit Chakpitak (CAMT - College of Arts, Media and Technology - Chiang Mai University); Laurent Buzon (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - Université Claude Bernard - Lyon I - Université Lumière - Lyon II - Institut National des Sciences Appliquées de Lyon); Abdelaziz Bouras (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - Université Claude Bernard - Lyon I - Université Lumière - Lyon II - Institut National des Sciences Appliquées de Lyon)
    Abstract: Industry cluster and supply chain are in focus of every countries which rely on knowledge-based economy. Both focus on improving the competitiveness of firm in the industry in the different aspect. This paper tries to illustrate how the industry cluster can increase the supply chain performance. Then, the proposed methodology concentrates on the collaboration and knowledge exchange in supply chain. For improving the capability of the proposed methodology, information technology is applied to facilitate the communication and the exchange of knowledge between the actors of the supply chain within the cluster. The supply chain of French stool producer was used as a case study to validate the methodology and to demonstrate the result of the study.
    Keywords: Knowledge engineering, Logistics, Knowledge Exchange
    Date: 2008–03–18

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