nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒08‒14
sixteen papers chosen by
Fabio Sabatini
University of Siena

  1. The effect of educational mismatch on wages for 25 countries By Peter Galasi
  2. Over-Education and the Skills of UK Graduates By Arnaud Chevalier; Joanne Lindley
  3. Sibling Dependence, Uncertainty and Education: Findings from Tanzania By Gabriel Helene Bie Lilleør
  4. Facets and Factors of Human Development in Tripura By Mishra, SK; Nayak, Purusottam
  5. Educational Effects of Widening Access to the Academic Track: A Natural Experiment By Eric Maurin; Sandra McNally
  6. Ability, Schooling Inputs and Earnings: Evidence from the NELS By Eren, Ozkan
  7. Improving Human Capital Formation in India By Sean Dougherty; Richard Herd
  8. Can Future Uncertainty Keep Children Out of School? By Gabriel Helene Bie Lilleør
  9. Ability and Self-Employment: Evidence from the NELS By Eren, Ozkan
  10. The Impact of Classroom Peer Groups on Pupil GCSE Results By Adele Atkinson; Simon Burgess; Paul Gregg; Carol Propper; Steven Proud
  11. Engaging Undergraduate Students in Transportation Studies through Simulating Transportation for Realistic Engineering Education and Training (STREET) By Chen-Fu Liao Author-X-Name-First: Chen-Fu Author-X-Name-Last: Liao; David Levinson; Henry Liu
  12. New Technology, Human Capital, Total Factor Productivity and Growth Process for Developing By Cuong Le Van; Tu-Anh Nguyen
  13. Human Capital Diversification within the Household: Findings from Rural Tanzania By Gabriel Helene Bie Lilleør
  14. Primary Education in India: Prospects of meeting the MDG Target By Sonia Bhalotra; Bernarda Zamora
  15. Assessing the Changing Employment Profiles in the Telecom Sector: Implementions for Education and Training By Jain Rekha
  16. Foundations of High Impact Entrepreneurship By Zoltan J. Acs

  1. By: Peter Galasi (Department of Human Resources, Corvinus University of Budapest)
    Abstract: By making use of the Duncan&Hoffman model, the paper estimates returns to educational mismatch using comparable microdata for 25 European countries. Our aim is to investigate the extent to which the main empirical regularities produced by other papers on the subject are confirmed by our data base. On the basis of tests proposed by Hartog&Oosterbeek, we also consider whether the observed empirical patterns are in line with the Mincerian basic human capital model and Thurow’s job competition model. Using Heckman’s sample-selection estimator, we find that results are rather consistent with those found in the literature, and that the job-competition model could be accepted, whereas the Mincerian human capital model could be rejected for most of the countries.
    Keywords: job-education matching, overeducation, undereducation, returns to over- and undereducation, international comparison
    JEL: J21 J23 J24 J31
    Date: 2008–08
  2. By: Arnaud Chevalier; Joanne Lindley
    Abstract: During the early Nineties the proportion of UK graduates doubled over a very short period of time. This paper investigates the effect of the expansion on early labour market attainment, focusing on over-education. We define over-education by combining occupation codes and a self-reported measure for the appropriateness of the match between qualification and the job. We therefore define three groups of graduates: matched, apparently over-educated and genuinely over-educated; to compare pre- and post-expansion cohorts of graduates. We find the proportion of over-educated graduates has doubled, even though over-education wage penalties have remained stable. This suggests that the labour market accommodated most of the large expansion of university graduates. Apparently over-educated graduates are mostly undistinguishable from matched graduates, while genuinely over-educated graduates principally lack non-academic skills such as management and leadership. Additionally, genuine over-education increases unemployment by three months but has no impact of the number of jobs held. Individual unobserved heterogeneity differs between the three groups of graduates but controlling for it, does not alter these conclusions.
    Keywords: Over-education, Skills
    JEL: J24 J31 I2
    Date: 2007–08
  3. By: Gabriel Helene Bie Lilleør (Department of Economics, University of Copenhagen)
    Abstract: Primary school enrolment rates are continuously low in many developing countries. The main explanation in the economic literature on schooling is focused on credit constraints and child labour, implying that the indirect cost of schooling in terms of foregone earnings is too high. This paper investigates the effects of future income uncertainty on sibling dependence in the schooling decisions of rural households in developing countries. Schooling tends to direct skills towards future urban employment, whereas traditional rural education or on-farm learning-by-doing tends to direct skills towards future agricultural employment. Given this dichtomy, the question is then: Does future income uncertainty influence the joint educational choice made by parents on behalf of their children and is it possible to test this on simple cross-sectional data? I extend a simple human capital portfolio model to a three period setting. This allows me to explore the natural sequentiality in the schooling decision of older and younger siblings. The model can generate testable empirical implications, which can be taken to any standard cross-sectional data set. I find empirical evidence of negative sibling dependence in the educational decision, which is consistent with a human capital portfolio theory of risk diversification and which cannot be explained by sibling rivalry over scarce resources for credit constrained households. The paper thus provides a complementary explanation to why enrolment rates in developing countries are often continuously low.
    Keywords: schooling; human capital investment; specific human capital; sibling dependency; old-age security; uncertainty; risk and income source diversification; liquidity constraints; Tanzania; Africa
    JEL: J13 J24 O15
    Date: 2008–08
  4. By: Mishra, SK; Nayak, Purusottam
    Abstract: This paper systematically presents the geographical and historical forces that have shaped the resource base, infrastructure, connectivity, socio-economic milieu and consequently the economy of Tripura determining the level of human development in the state. In spite of a great burden of population on its fragile economy, the state has secured an appreciable score in matters of education and health. The human development of the state needs to be harnessed to promote economic growth in terms of increased productivity and higher per capita income. Human development has also to concord with enhanced dexterity and favorable attitude to economic development.
    Keywords: Human development; Tripura
    JEL: O15
    Date: 2008–07–20
  5. By: Eric Maurin; Sandra McNally
    Abstract: It is difficult to know whether widening access to schools which provide a more academically oriented general education makes a difference to average educational achievement. We make use of reforms affecting admission to the 'high ability' track in Northern Ireland, but not England. The comparison of educational outcomes between Northern Ireland and England before and after the reform identifies the net effect of expanding the academic track to accommodate more students. This is composed of the direct effect of the more academic track on individual performance and the indirect effect arising on account of the change in peer group composition. Our paper is relevant to debate on the consequences of ability tracking and of expanding access to the academic track.
    Keywords: education, tracking, selection
    JEL: I2
    Date: 2007–08
  6. By: Eren, Ozkan
    Abstract: Utilizing the National Educational Longitudinal Study data, this paper examines the role of pre-market cognitive and noncognitive abilities, as well as schooling inputs, on young men’s earnings. In addition to the conditional mean, we estimate the impacts over the earnings distribution using recently developed (instrumental) quantile regression techniques. Our results show that noncognitive ability is an important determinant of earnings, but the effects are not uniform across the distribution. We find noncognitive ability to be most effective for low earners. Cognitive ability, on the other hand, does not yield any impact either at the mean or at the distributional level once we control for educational attainment. We also find that, on average, pupil-teacher ratio is a significant determinant of earnings. However, similar to noncognitive ability, the effects are not homogeneous.
    Keywords: Cognitive Ability; Instrumental Quantile Regression; Measurement Error; Noncognitive Ability; Pupil-Teacher Ratio
    JEL: C10 C14 I21 J24 I28
    Date: 2008–06
  7. By: Sean Dougherty; Richard Herd
    Abstract: The provision of high-quality education and health care to all of the population is considered a core element of public policy in most countries. In India, the government is active in both education and health but the private sector also plays an important role, notably for heath, and to a lesser extent in education. At present, the quality and quantity of the outputs from education, and also form public health care, are holding back the process of economic development. Steps are being taken to draw more children into primary education and the paper considers ways to keep children in school. It also considers institutional changes that may help to improve the performance of the educational system and so boost human capital formation. This working Paper relates to the 2007 Economic Survey of India ( <P>Améliorer la formation du capital humain en Inde <BR>Permettre à l’ensemble de la population de bénéficier d’une éducation et de soins de santé de qualité est l’un des enjeux majeurs de la politique publique dans la plupart des pays. En Inde, les pouvoirs publics interviennent aussi bien dans l’éducation que dans les soins de santé, ce qui n’empêche pas le secteur privé de jouer un rôle important, en particulier dans le premier de ces domaines. À l’heure actuelle, les performances qualitatives et quantitatives de l’éducation et des services publics de santé constituent un frein au processus de développement économique. Des mesures ont été prises pour augmenter la fréquentation de l’enseignement primaire, et le présent document étudie les moyens de lutter contre les abandons scolaires. Il analyse également les changements institutionnels nécessaires pour contribuer à améliorer les performances du système éducatif et stimuler ainsi la formation du capital humain. Ce document de travail se rapporte à l’Étude économique de l’Inde 2007 (
    Keywords: tertiary education, education policy, Returns to education, literacy rates, age cohorts, primary, secondary, politique éducative, taux d’alphabétisation, cohorte d’âge, rendement de l’enseignement, primaire, secondaire, supérieur
    JEL: I0 I21 J24
    Date: 2008–08–04
  8. By: Gabriel Helene Bie Lilleør (Department of Economics, University of Copenhagen)
    Abstract: There is little doubt in the literature, that poverty and liquidity constraints can drive children out of school and into child labour in developing countries. But are there other important explanations for low primary school enrolment rates? The child labour and schooling literature often ignores that uncertainty about future returns results in a need for risk diversification, that children function as old-age security providers when there are no available pension systems, that the human capital investment decision of one child is likely to be influenced by that of his/her siblings, and that rural parents face a choice of investing in either specific or general human capital of their children. In this paper, I investigate the effects of future income uncertainty on the joint human capital investment decision of children in a household. I develop and calibrate a simple illustrative human capital portfolio model and show that existing levels of uncertainty can indeed result in less than full school enrolment within a household, even in a world of perfect credit markets. The paper thus offers an alternative explanation for why it might be optimal for rural parents not to send all of their children to school.
    Keywords: schooling; child labour; specific human capital; traditional education; intergenerational transfers; old-age security; uncertainty; income source diversification; liquidity constraints
    JEL: J13 J24 O15
    Date: 2008–08
  9. By: Eren, Ozkan
    Abstract: Using the National Educational Longitudinal Study data, this paper examines the role of pre-market abilities, as well as other determinants, on young men’s self-employment decision. Our results indicate that cognitive and noncognitive abilities are two important, in opposing directions, predictors of self-employment. We also find that cognitive and noncognitive abilities differ in their malleability with the latter being more malleable during adolescence. In addition, having a self-employed father, being black and family size exert large influences on self-employment probability.
    Keywords: Cognitive Ability; Endogeneity; Intergenerational Correlation; Noncognitive Ability; Reliability Ratios
    JEL: J00 J24 C25
    Date: 2008–05
  10. By: Adele Atkinson; Simon Burgess; Paul Gregg; Carol Propper; Steven Proud
    Abstract: The effect of a more able peer group on a child’s attainment is considered an integral part in estimating a pupil level educational production function. Examinations in England at age 16 are tiered according to ability, leading to a large stratification of pupils by ability. However, within tiers, there is a range of policies between schools regarding setting, ranging from credibly random to strict setting by results from examinations at age 14. We use this variation to estimate ordinary least squares (OLS) estimates, with school and teacher fixed effects, of the effect of a more able peer group using a subset of schools that has apparently random allocation of pupils. As a robustness test of the apparently random setting results, we use an instrumental variables (IV) methodology developed by Lefgren (2004b). We find significant, positive, and non-trivial effects of a more able peer group using both the OLS and IV estimations for English and mathematics.
    Keywords: peer groups, education
    JEL: J13 D1 I21 I38
    Date: 2008–01
  11. By: Chen-Fu Liao Author-X-Name-First: Chen-Fu Author-X-Name-Last: Liao; David Levinson; Henry Liu (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: The practice of transportation engineering and planning has evolved substantially over the past several decades. A new paradigm for transportation engineering education is required to better engage students and deliver knowledge. Simulation tools have been used by transportation professionals to evaluate and analyze the potential impact of design or control strategy changes. Conveying complex transportation concepts can be effectively achieved by exploring them through simulation. Simulation is particularly valuable in transportation education because most transportation policies and strategies in the real world take years to implement with a prohibitively high cost. Transportation simulation allows learners to apply different control strategies in a risk-free environment and to expose themselves to transportation engineering methodologies that are currently in practice. Despite the advantages, simulation, however, has not been widely adopted in the education of transportation engineering. Using simulation in undergraduate transportation courses is sporadic and reported efforts have been focused on the upper-level technical elective courses. A suite of web-based simulation modules was developed and incorporated in the undergraduate transportation courses at University of Minnesota. The STREET (Simulating Transportation for Realistic Engineering Education and Training) research project was recently awarded by NSF (National Science Foundation) to develop web-based simulation modules to improve instruction in transportation engineering courses and evaluate their effectiveness. Our ultimate goal is to become the epicenter for developing simulation-based teaching materials, an active textbook, which offers an interactive learning environment to undergraduate students. With the hand-on nature of simulation, we hope to improve student understanding of critical concepts in transportation engineering and student motivation toward transportation engineering, and improve student retention in the field. We also would like to disseminate the results and teaching materials to other colleges to integrate the simulation modules in their curricula.
    Keywords: Transportation Education and Training, Transportation Simulation, Roadway Geometry Design
    JEL: R41 R42 R48 A23
    Date: 2008
  12. By: Cuong Le Van (Centre d'Economie de la Sorbonne, Universite Paris-1, France); Tu-Anh Nguyen (Centre d'Economie de la Sorbonne, Universite Paris-1, France)
    Abstract: Solowian view on miracle growth rate in NIEs as a result of productivity growth whereas many others (e.g. Krugman [1997]) convince that broad capital accumulation is only true engine underlying NIEs' growth. Krugman's view is correct in the short and mid terms, however in the long term, TFP is the main engine of growth. We show that the optimal strategy for a developing country consists of accumulating physical capital first and there is no research activity. When the country reaches a certain level of development, which is endogenously determined in the model, the technological progress may be generated. Three critical factors: the amount of available human capital; the relative price of technological capital; and the initial income of the economy.
    Keywords: New technology capital, Human Capital, Developing country
    Date: 2008
  13. By: Gabriel Helene Bie Lilleør (Department of Economics, University of Copenhagen)
    Abstract: Lack of primary schooling among rural children in developing countries is often attributed to credit constraints and household demand for child labour, implying that direct and indirect costs of schooling are high. Surprisingly few studies have considered the importance of parents' expected returns of investing in their childrens human capital, despite the fact that most parents rely on their children for old-age support and subsistence. In this paper, I propose an alternative model for human capital investment based on the household, rather than the individual child, incorporating the fact that parents bear the costs of educating all their children and face uncertainty about the level and share of future returns. This uncertainty can make it optimal for parents to ensure a certain degree of human capital diversification within the household. The model implications allow me to test whether it is the need for diversification or the costs of schooling that dominate the human capital investment decision in rural households. Using extraordinary long panel data from a rural region in Northwestern Tanzania, I find strong empirical evidence of diversification effects for rural sons, but not for rural daughters. Exactly in line with what should be expected for a patrilineal society. This can potentially have far reaching policy implications.
    Keywords: intergenerational contract; social compact; schooling; human capital; traditions; ethnicity; ethnic diversity; social capital; Tanzania; Africa
    JEL: J13 J24 O15
    Date: 2008–08
  14. By: Sonia Bhalotra; Bernarda Zamora
    Abstract: This paper uses two large repeated cross-sections, one for the early 1990’s, and one for the late 1990’s, to describe growth in school enrolment and completion rates for boys and girls in India, and to explore the extent to which enrolment and completion rates have grown over time. It decomposes this growth into components due to change in the characteristics that determine schooling, and another associated with changes in the responsiveness of schooling to given characteristics. Our results caution against the common practice of using current data to make future projections on the assumption that the model parameters are stable. The analysis nevertheless performs illustrative simulations relevant to the question of whether India will be able to achieve the Millennium Development Goal of realising universal primary education by the year 2015. The simulations suggest that India will achieve universal attendance, but that primary school completion rates will not exhibit much progress.
    Keywords: Millennium Development Goals, primary schooling, attendance, completion rates, gender, India, decomposition
    JEL: I21 I28 O12 J18
    Date: 2008–01
  15. By: Jain Rekha
    Abstract: Telecom sector in India has been growing very fast and changing very rapidly in service delivery mechanisms used, target segments addressed, technogical platforms for service delivery etc. Globally also the growth scenario is very positive. This means that this sector offers employment opportunities that are attractive. In order to exploit these opportunities, the sector needs people with the approppriate employment profiles that match the changing requirements both in atributes and numbers. However, the current education system is not equipped to provide the requisite profiles. This paper identifies and quantifies the skill gap both in terms of focus areas and numbers by segmenting the sector. It suggest directions in which the change must happen. It also reviews innovative approaches in the private and government sector in India and abroad with a view to assess the adapatability of these approaches on a larger scale in India.
    Date: 2008–08–06
  16. By: Zoltan J. Acs (George Mason University; Max Planck Institute of Economics)
    Abstract: This survey reviews the theoretical literature on high impact entrepreneurship. The survey is guided in part by the recent classification changes at the Journal of Economic Literature (JEL) regarding entrepreneurship. The board voted to create a new classification code, L26, for entrepreneurship. The JEL intends to use this code for all articles and books that focus on economic questions related to entrepreneurial activity. Publications related to questions on occupational choice issues will be cross classified with J23; those focusing on innovation and entrepreneurship will be cross classified with O31; those focusing on finance will be cross classified with G24 Investment Banking, venture capital, brokerage and rating agencies; those focusing on new firms, start ups; and business related publications on how to be an entrepreneur will be cross classified (or solely classified) with M13. What does this economic literature tell us about entrepreneurship? In order to answer the questions this review covers the intersection of entrepreneurship with labor markets, innovation and capital markets - the three pillars of high impact entrepreneurship.
    Keywords: Entrepreneurship, High Impact Firms, Occupational Choice, Innovation, Finance, Policy, leveraged startups.
    JEL: L26 O31 J23 G24
    Date: 2008–08–12

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