nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒06‒27
ten papers chosen by
Fabio Sabatini
University of Siena

  1. Can Education Save Europe From High Unemployment? By Nicole Walter; Runli Xie
  2. 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
  3. Uncertainty, education, and the school-to-work transition: theory and evidence from Brazil By L. Guarcello; F. Rosati; P. Scaramozzino
  4. The Causes and Consequences of Cross-Country Differences in Schooling Attainment By Schoellman, Todd
  5. Building institutions for growth and human developement : an economic perspective applied to transitional countries of Europe and CIS By Zeghni, Sylvain; Fabry, Nathalie
  6. Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors By Scott E. Carrell; James E. West
  7. High School Employment, School Performance, and College Entry By Lee, Chanyoung; Orazem, Peter
  8. Evidence About the Potential Role for Affirmative Action in Higher Education By Braz Camargo; Ralph Stinebrickner; Todd Stinebrickner
  9. Objective overeducation and worker well-being: a shadow price approach By D. VERHAEST; E. OMEY
  10. Intangible Capital and Productivity: An Exploration on a Panel of Italian Manufacturing Firms By Maria Elena Bontempi; Jacques Mairesse

  1. By: Nicole Walter; Runli Xie
    Abstract: Empirical observations show that education helps to protect against labor market risks. This is twofold: The higher educated face a higher expected wage income and a lower probability of being unemployed. Although this relationship has been analyzed in the literature broadly, several questions remain to be tackled. This paper contributes to the existing literature by looking at the above mentioned phenomena from a purely theoretic perspective and in a European context. We set up a model with search-and-matching frictions, collective bargaining and monopolistic competition in the product market. Workers are heterogeneous in their human capital level. It is shown that higher human capital increases the wage rate and reduces unemployment risks, which is consistent with empirical observations for European countries.
    Keywords: human capital, search frictions, collective bargaining, monopolistic competition
    JEL: E24 J24 J52
    Date: 2008–06
  2. 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
  3. By: L. Guarcello; F. Rosati; P. Scaramozzino
    Abstract: This paper develops a model of investment in education and school-to-work transition under uncertainty. The main predictions of the model are tested for Brazilian households using PNAD data. Increased uncertainty on labour market outcomes is shown to be associated with higher levels of schooling by young people, consistent with a real options approach to education as an investment.
    Date: 2008–04
  4. By: Schoellman, Todd
    Abstract: This paper uses labor market evidence to quantify the importance of quality-adjusted schooling differences in accounting for cross-country income differences. I model labor markets that are consistent with cross-country data on schooling attainment, education quality, and the average returns to schooling of a country’s emigrants and its non-migrants. The model suggests that the Mincerian returns to schooling of immigrants to the United States measure the education qualities of their source countries. Measured this way, quality differences across countries are large, and the calibrated model shows that schooling accounts for a factor of 5 of the income difference between the U.S. and the poorest countries. The evidence suggests that immigrants to the U.S. are positively selected members of their source country, and that immigrants from developing countries are more selected than those from developed countries. Then the low education quality measured in the sample actually overestimates the education quality of the average non-migrant, particularly for developing countries. Two methods of controlling for selection among immigrants thus predict a moderately larger role for schooling, between a factor of 6.5 and 7.9.
    JEL: O47
    Date: 2008–05
  5. By: Zeghni, Sylvain; Fabry, Nathalie
    Abstract: The collapse of the communist system during the late 1980’s redefined the hierarchy among Central and Eastern European Countries (CEECs) and the former USSR. Some of these countries joined the EU ; some did not ; others formed the CIS . In particular, institutions, mainly market and political one, appear to be a strong foundation for a rapid but irreversible shift from socialism to market-oriented economy. The relationship between economic performance and the quality of domestic institutions has emerged recently as a major subject of interest. The literature shows that the higher the quality of domestic institutions the better the effects on the Human development and growth of a country. The aim of this paper is to analyse in a more qualitative way the role of institutions in transitional countries in the CEECs and CIS. The main question we address is: what kind of institutional arrangement leads to Human development? We propose an analytical pattern where global performance (i.e. Human development) is the final outcome of a new institutional arrangement.
    Keywords: Transition; CIS; Institutions; Human Development; Growth
    JEL: P36 O17 O43 P27
    Date: 2008–05
  6. By: Scott E. Carrell; James E. West
    Abstract: It is difficult to measure teaching quality at the postsecondary level because students typically "self-select" their coursework and their professors. Despite this, student evaluations of professors are widely used in faculty promotion and tenure decisions. We exploit the random assignment of college students to professors in a large body of required coursework to examine how professor quality affects student achievement. Introductory course professors significantly affect student achievement in contemporaneous and follow-on related courses, but the effects are quite heterogeneous across subjects. Students of professors who as a group perform well in the initial mathematics course perform significantly worse in follow-on related math, science, and engineering courses. We find that the academic rank, teaching experience, and terminal degree status of mathematics and science professors are negatively correlated with contemporaneous student achievement, but positively related to follow-on course achievement. Across all subjects, student evaluations of professors are positive predictors of contemporaneous course achievement, but are poor predictors of follow-on course achievement.
    JEL: I20
    Date: 2008–06
  7. By: Lee, Chanyoung; Orazem, Peter
    Abstract: The proportion of U.S. high school students working during the school year ranges from 23% in the freshman year to 75% in the senior year. This study estimates how cumulative work histories during the high school years affect probability of dropout, high school academic performance, and the probability of attending college. Variation in individual date of birth and in state truancy laws along with the strength of local demand for low-skill labor are used as instruments for endogenous work hours during the high school career. Working more hours during the academic year does not affect high school academic performance. However, increased high school work intensity raises the likelihood of completing high school but lowers the probability of going to college. These results are similar for boys and girls, and so working during high school does not explain the widening gap in college entry between men and women.
    Keywords: child labor,GPA, college enrollment, dropout,truancy age,
    JEL: N3
    Date: 2008–06–18
  8. By: Braz Camargo (University of Western Ontario); Ralph Stinebrickner (Berea College); Todd Stinebrickner (University of Western Ontario)
    Abstract: In two recent cases involving the University of Michigan, the Supreme Court examined whether race should be allowed to play an explicit role in the admission decisions of schools. The primary argument in these court cases and others has been that racial diversity strengthens the quality of education offered to all students. Underlying this argument is the notion that educational benefits arise if interactions between students of different races improve preparation for life after college by, among other things, fostering mutual understanding and correcting misperceptions. Then, a fundamental condition necessary for the primary legal argument to be compelling is that the types of students who choose to enter college actually have incorrect beliefs about individuals from different races at the time of college entrance. In this paper we provide, to the best of our knowledge, the first direct evidence about this condition by taking advantage of unique new data that was collected specifically for this purpose.
    Date: 2008
    Abstract: This paper examines, for a sample of Flemish school leavers, the relation between objective over-education and job satisfaction by applying a shadow price approach. We differentiate between direct effects of overeducation and indirect effects via other job characteristics that are associated with overeducation. Additional fixed-effects estimates are executed to account for individual heterogeneity. The utility consequences of overeducation are found to be large and cannot be compensated by a reasonable wage increase at the start of the first employment. These outcomes suggest that, at labour market entry, overeducation is largely involuntary, and is likely to induce negative productivity costs. The negative consequences of overeducation are also found to dimi-nish with years of work experience.
    Keywords: overeducation, mismatch, underemployment, job satisfaction, well-being, shadow price
    JEL: J24 J28
    Date: 2008–04
  10. By: Maria Elena Bontempi; Jacques Mairesse
    Abstract: The paper examines the size and productivity of total intangible capital relative to total tangible capital for a large panel of Italian Manufacturing firms. In the analysis, we decompose total intangibles in two different ways: in intangibles expensed in firms' current accounts (as usually considered in empirical studies) versus intangible capitalized in firms' balance sheets (usually not considered); and in "intellectual capital" (i.e. R&D expenditures, and patenting and related costs) versus "customer capital" (i.e., advertising expenditure, and trademarks and related costs). We systematically assess the robustness of our results by using different specifications of the production functions implying different elasticities of substitution between tangible and intangible capital, and comparing different panel data estimates. Our results underscore that firms' accounting information on intangible investments is genuinely informative, showing that intangible capital and its different components are at least as productive as tangible capital.
    JEL: C23 C52 D24
    Date: 2008–06

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