nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒10‒13
fifteen papers chosen by
Fabio Sabatini
University of Siena

  1. Human capital investment and long-term poverty reduction in rural Mexico By Paul Winters; Vera Chiodi
  2. The Evolution of Education: A Macroeconomic Analysis By Diego Restuccia; Guillaume Vandenbroucke
  3. Firm Training and Wage Rigidity By Wolfgang Lechthaler
  4. Family Background, Family Income, Cognitive Tests Scores, Behavioural Scales and their Relationship with Post-secondary Education Participation: Evidence from the NLSCY By Pierre Lefebvre; Philip Merrigan
  5. Mapping of the PhDs in the Private Sector. A Literature Review By Susanna Stén
  6. Intergenerational Education Mobility Among the Children of Canadian Immigrants By Aydemir, Abdurrahman; Chen, Wen-Hao; Corak, Miles
  7. The Impact of ICT Usage, Workplace Organisation and Human Capital on the Provision of Apprenticeship Training : A Firm-level Analysis Based on Swiss Panel Data By Heinz Hollenstein; Tobias Stucki
  8. Growth and Competition in a Model of Human Capital Accumulation and Research By Bianco, Dominique
  9. Demand for Skills, Supply of Skills and Returns to Schooling in Cambodia By Chris SAKELLARIOU
  10. Human Capital Externalities with Monopsonistic Competition By Kaas, Leo
  11. Human Capital Investment with Competitive Labor Search By Kaas, Leo; Zink, Stefan
  12. Intellectual Property Rights and the Knowledge Spillover Theory of Entrepreneurship By Zoltan J. Acs; Mark Sanders
  13. Public Education and Growth in Developing Countries By Christiane Schuppert; Nadja Wirz
  14. The Transmission of Women's Fertility, Human Capital and Work Orientation across Immigrant Generations By Blau, Francine D.; Kahn, Lawrence M.; Liu, Albert Yung-Hsu; Papps, Kerry L.
  15. Parental Labor Market Success and Children's Education Attainment By Carsten Ochsen

  1. By: Paul Winters; Vera Chiodi
    Abstract: By focusing on human capital investment, the Mexican Oportunidades program will inuence the economic choices of the rural poor. To understand how bene_ciaries may alter their behaviour as a result of this intervention, this paper uses administrative data to analyze the economic activities of the Mexican rural poor. Results indicate that investments in education are likely to shift recipients from agricultural wage employment toward non-farm wage employment. The magnitude of this impact will be inuenced by household assets and by the location of the household. The results suggest the need for policies that complement the government's focus on human capital investment.
    Date: 2008
  2. By: Diego Restuccia; Guillaume Vandenbroucke
    Abstract: Between 1940 and 2000 there has been a substantial increase of educational attainment in the United States. What caused this trend? We develop a model of schooling decisions in order to assess the quantitative contribution of technological progress in explaining the evolution of education. We use earnings across educational groups and growth in gross domestic product per worker to restrict technological progress. These restrictions imply substantial skill-biased technical change (SBTC). We find that changes in relative earnings through SBTC can explain the bulk of the increase in educational attainment. In particular, a calibrated version of the model generates an increase in average years of schooling of 48 percent compared to 27 percent in the data. This strong effect of changes in relative earnings on educational attainment is robust to relevant variations in the model and is consistent with empirical estimates of the long-run income elasticity of schooling. We also find that the substantial increase in life expectancy observed during the period contributes little to the change in educational attainment in the model.
    Keywords: educational attainment, schooling, skill-biased technical progress, human capital
    JEL: E1 O3 O4
    Date: 2008–10–05
  3. By: Wolfgang Lechthaler
    Abstract: Although wage rigidity is among the most prominent subjects in modern economics, its effects on wage compression and firm training have thus far not been considered. This paper is trying to bridge this gap by using a simple two period model which can still by analyzed analytically. I am able to show that wage rigidity increases wage compression. However, contrary to previous work this is not sufficient to increase firms' training investments. The reason lies in the endogeneity of separations, which become more frequent
    Keywords: Human Capital, Wage Rigidity, Training
    JEL: J24 J31 M53
    Date: 2008–10
  4. By: Pierre Lefebvre; Philip Merrigan
    Abstract: This paper exploits the panel feature of the Canadian National Longitudinal Survey of Children and Youth (NLSCY) and the large diversity of measures collected on the children ad their families over 6 cycles (1994-1995 to 2004-2005) to explain high school graduation and postsecondary education (PSE) choices of Canadian youth aged 18 to 21 observed in the most recent wave of the survey. In estimating how family background, family income, cognitive abilities, non-cognitive abilities and behavioural scores influence schooling choices they can be used as markers for identifying children at risk of not pursuing PSE. We focus on the impact of measures that are specific to the NLSCY which contains a host of scores on several dimensions such as the cognitive achievement of children (reading and math test scores); behavioural scores that measure the levels of hyperactivity, aggression, and pro-sociality; scores that measure self-esteem and self-control (non-cognitive abilities); and, family scores that measure the quality of parenting, family dysfunction, of neighbourhoods and schools quality. The math and reading scores are particularly interesting because they are computed from objective tests and are not based on any type of recall, as compared, for example, with the Youth in Transition Survey (YITS) data set. Despite the fact that income, as measured as the mean income ($2002) of the family during cycles 1 to 4, does not seem to be a key player for PSE attendance or high school graduation, the sign of its effect is generally positive and non-linear, increases for children in very low income will have a large effect that those with higher levels. More importantly, several variables that are characteristics of low-income families play a key role for schooling attainment. For example, being from a single-parent/guardian home with a poorly educated PMK and with less than (perceived) excellent/very good health or with high levels of hyperactivity for males or high levels of aggression for young teenage females will almost negate any chance of attaining the level of PSE.
    Keywords: High school graduation, postsecondary education, schooling transition, gender, youth, longitudinal data
    JEL: I21 J13 J16 J24
    Date: 2008
  5. By: Susanna Stén
    Abstract: ABSTRACT : This review maps out the labour market situation of PhDs employed in the private sector. To begin with, the theoretical motives for employing PhDs and the supporting empirical evidence are examined. The potential benefits of companies from employing PhDs can be divided into productivity and innovation effects as well as knowledge contributions from networking, and external effects. Next, the international empirical literature on PhDs in the private sector is surveyed. The mostly US based research focuses primarily on PhDs in the fields of science and engineering. It provides no synoptic picture of the employment situation of the PhDs in the private sector and leaves a need for further research. A more detailed review of the Finnish literature shows that the private sector employs only about 15% of all PhDs in the Finnish labour market. There is, however, large variation between different fields of study, genders and age groups. The rapid increase in graduating PhDs in recent years indicate that the employment patterns of PhDs might be changing. Further research is needed to answer questions like : How has the increased supply changed the labour market situation of PhDs? Has the role of the private sector as an employer of PhDs changed? And is the allocation of PhDs between fields of study efficient? Another issue that has earned only very little attention is the mobility of PhDs in the labour market. Mobility within and between sectors is very important for both the diffusion of knowledge in the economy and the development of the career and wage profiles of PhDs. Because of the recent development, the existing knowledge gaps and the rapidly ageing research conducted up to this day, there is, thus, an urgent need for further research in this field.
    Keywords: PhDs, private sector, career, wages, employment
    JEL: J24 J44 J6
    Date: 2008–10–03
  6. By: Aydemir, Abdurrahman; Chen, Wen-Hao; Corak, Miles
    Abstract: We analyse the intergenerational education mobility of Canadian men and women born to immigrants. A detailed portrait of Canadians is offered, as are estimates of the degree of intergenerational mobility among the children of immigrants. Persistence in the years of schooling across the generations is rather weak between immigrants and their Canadian-born children, and one third as strong as for the general population. Parental earnings are not correlated with years of schooling for second-generation children and, if anything, are negatively correlated. Finally, we find that the intergenerational transmission of education has not changed across the birth cohorts of the post-war period.
    Keywords: Education, training and learning, Population and demography, Ethnic diversity and immigration, Educational attainment, Mobility and migration, Ethnic groups and generations in Canada
    Date: 2008–10–02
  7. By: Heinz Hollenstein (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Firstly, we investigated the determinants of a) the propensity of Swiss firms to provide apprenticeship training, and b) the intensity of training (measured by the employment share of apprentices). We primarily were interested in the relevance as explanatory factors of the three constituent elements of the “new firm paradigm” that emerged in the course of the last twenty years: intensive usage of ICT; redesign of workplace organisation; shift from lower to higher skills. We found that the skill composition of the workforce (including further training), ICT intensity and, to a lesser extent, workplace organisation are important drivers of apprenticeshipbased skill formation, with stronger effects on training propensity than on training intensity. Secondly, we analysed the relationship between apprenticeship training and firm performance. It turned out that productivity and apprenticeships (training propensity or intensity) are negatively correlated. The study is relevant for training policy in advanced economies where the new firm paradigm plays a large and growing role.
    Keywords: Firm-based training, Apprenticeship, Workplace organisation, ICT, Skill formation, Human capital
    JEL: J2 L2 O3 M5
    Date: 2008–09
  8. By: Bianco, Dominique
    Abstract: The aim of this paper is to analyze the relationship between competition and growth in a model of human capital accumulation and research by disentangling the monopolistic mark-up in the intermediate goods sector and the returns to specialization in order to have a better measure of competition. We find that the steady-state output growth rate depends on the parameters describing preferences, human capital accumulation technology and R&D activity. We also show that the relationship between competition and growth is inverse U shaped. This result that seems to be in line this empirical results (Aghion and Gri±th (2005)) is explained by the resource allocation effect.
    Keywords: Endogenous growth; Horizontal differentiation; Technological change; Imperfect competition; Human capital
    JEL: L16 O41 J24 O31 D43
    Date: 2008–10–06
  9. By: Chris SAKELLARIOU (Division of Economics, Nanyang Technological University, Singapore)
    Abstract: In this paper I take a detailed look into the returns to schooling in Cambodia using the 1997 and 2003-04 Socioeconomic Surveys of Households and alternative estimation techniques (OLS vs. Family Fixed Effects and Instrumental Variables). The main focus of the analysis has to do with differences by sector (public vs. private). In Cambodia, the average educational attainment of workers in the public sector is significantly higher compared to the private sector. Without considering issues of selection into the public vs. the private sector, the wage premium for one additional year of schooling in the private sector is about twice that in the public sector for both men and women. Furthermore, the average return to one additional year of potential labor market experience is higher in the private sector. This raises questions about the reasons for the self-selection of more educated workers in the public sector in Cambodia. The picture changes drastically, especially in the case of female employment, once the assumption that the location of individuals in the public and private sectors is the outcome of a random process. However, after correcting for selection bias using Heckman's correction, one additional year of schooling still increases earnings by more in the private sector for men, but the spread between sectors narrows. However for women, one additional year of schooling increases earnings in the public sector by more than in the private sector. Furthermore, now the return to one additional year of potential labor market experience is significantly higher in the public sector, for both men and women. Other findings indicate that the supply of more educated workers has outstripped demand, resulting in a decline in the return to tertiary education and a stable return to secondary education. The dynamics of the demand and supply of skills and their changes over the time suggest that the supply of post-primary skills is adequate, except perhaps in the private sector.
    Date: 2008–05
  10. By: Kaas, Leo (University of Konstanz)
    Abstract: This paper provides a novel microeconomic foundation for pecuniary human capital externalities in a labor market model of monopsonistic competition. Multiple equilibria arise because of a strategic complementarity in investment decisions.
    Keywords: externalities, human capital, multiple equilibria
    JEL: D43 J24
    Date: 2008–09
  11. By: Kaas, Leo (University of Konstanz); Zink, Stefan (University of Konstanz)
    Abstract: We study human capital accumulation in an environment of competitive search. Given that unemployed workers can default on their education loans, skilled individuals with a larger debt burden prefer riskier but better paid careers than is socially desirable. A higher level of employment risk in turn depresses the skill premium and the incentives to invest in education. The equilibrium allocation is characterized by too much unemployment, underinvestment by the poor, and too little investment in skill-intensive technologies. A public education system funded by graduate taxes can restore efficiency. More generally, differences in education funding can account for cross-country variations in wage inequality.
    Keywords: directed search, investment, education finance
    JEL: I22 J24 J31
    Date: 2008–09
  12. By: Zoltan J. Acs; Mark Sanders
    Abstract: We develop a model in which stronger protection of intellectual property rights has an inverted U-shaped effect on innovation. Intellectual property rights protection allows the incumbent firms to capture part of the rents of commercial exploration that would otherwise accrue to the entrepreneurs. Stronger patent protection will increase the incentive to do R&D and generate new knowledge. This has a positive impact on entrepreneurship and innovation. However, after some point, further strengthening patent protection will reduce the returns to entrepreneurship sufficiently to reduce overall economic growth.
    Keywords: Intellectual Property Rights, Endogenous Growth, Entrepreneurship, Incentives, Knowledge Spillovers, Rents
    JEL: J24 L26 M13 O3
    Date: 2008–09
  13. By: Christiane Schuppert (University of Dortmund); Nadja Wirz (University of St. Gallen)
    Abstract: Human capital plays a key role in fostering technology adoption, the major source of economic growth in developing countries. Consequently, enhancing the level of human capital should be a matter of public concern. The present paper studies public education incentives in an environment in which governments can invest in human capital to facilitate the adoption of new technologies invented abroad or, instead, focus on consumptive public spending. Although human capital is pivotal for growth, the model reveals that incentives to invest in public education vanish if a country is poorly endowed with human capital. Rather, governments of these poorly-endowed countries focus on consumptive public spending. As a result, while their better-endowed counterparts build up human capital thereby promoting technology adoption and growth, the growth process in poorly-endowed countries stagnates.
    Keywords: growth; public education; human capital; technology adoption
    JEL: O4 H4 F2
    Date: 2008–10
  14. By: Blau, Francine D. (Cornell University); Kahn, Lawrence M. (Cornell University); Liu, Albert Yung-Hsu (Cornell University); Papps, Kerry L. (Nuffield College, Oxford)
    Abstract: Using 1995–2006 Current Population Survey and 1970–2000 Census data, we study the intergenerational transmission of fertility, human capital and work orientation of immigrants to their US-born children. We find that second-generation women's fertility and labor supply are significantly positively affected by the immigrant generation's fertility and labor supply respectively, with the effect of mother's fertility and labor supply larger than that of women from the father's source country. The second generation's education levels are also significantly positively affected by that of their parents, with a stronger effect of father's than mother's education. Second-generation women's schooling levels are negatively affected by immigrant fertility, suggesting a quality-quantity tradeoff for immigrant families. We find higher transmission rates for immigrant fertility to the second generation than we do for labor supply or education: after one generation, 40-65% of any immigrant excess fertility will remain, but only 12-18% of any immigrant annual hours shortfall and 18-36% of any immigrant educational shortfall. These results suggest a considerable amount of assimilation across generations toward native levels of schooling and labor supply, although fertility effects show more persistence.
    Keywords: immigration, second generation, gender, labor supply, fertility, human capital
    JEL: D10 J16 J22 J24 J61
    Date: 2008–09
  15. By: Carsten Ochsen (University of Rostock)
    Abstract: This study examines the effects of parental labor market activities on children's education attainment. In contrast to the existing literature we consider parental experiences until the children graduate from school. In addition, the effects of the regional economic environment during teacher's decision about the secondary school track are analyzed. Using data drawn from the German Socio-Economic Panel an ordered probit estimator is used to model children's education attainment. With respect to parental labor market participation we find that father's full-time and mother's part-time employment have significant positive effects on children's education attainment. Furthermore, we obtain evidence that the regional GDP growth rate and the regional unemployment rate when children are 10 years old are significantly related to the education that these children ultimately achieve. Our interpretation is that regional economic conditions affect teachers'recommendations for the secondary school track, which are given during the last year of primary school. The results reveal the less successful parents are on the labor market, the lower the average education level of their children. A second important conclusion is that children who live in regions which experience a poor economic performance over a longer period are, on average, less educated than children who live in more affluent regions.
    Keywords: education attainment, parental labor supply, macroeconomic uncertainty, family structure, intergenerational link
    JEL: I21 J22 E24 J10 J24
    Date: 2008

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.