nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2008‒11‒25
fourteen papers chosen by
Fabio Sabatini
University of Siena

  1. Should we raise public expenditure on basic education and reduce expenditure at college? By Marisa Hidalgo-Hidalgo; Iñigo Iturbe-Ormaetxe
  2. External Return to Education in Poland By Strawinski, Pawel
  3. On the impact of labor market matching on regional disparities By THARAKAN, Jo; TROPEANO, Jean-Philippe
  4. Imagining Education: Educational Policy and the Labor Earnings Distribution By Diego Amador
  5. Global Migration of the Highly Skilled: A Tentative and Quantitative Approach By Dunnewijk, Theo
  6. Education-Occupation Mismatch: Is There an Income Penalty? By Nordin, Martin; Persson, Inga; Rooth, Dan-Olof
  7. FDI and Human Capital Development By Subbarao Srinivas P.
  8. Children and Parents Time Use: Empirical Evidence on Investment in Human Capital in France, Italy and Germany By Cardoso, Ana Rute; Fontainha, Elsa; Monfardini, Chiara
  9. Literacy, Skills and Welfare: Effects of Participation in an Adult Literacy Program By Niels-Hugo Blunch; Claus C Pörtner
  10. Network Effects in a Human Capital Based Economic Growth Model By Teresa V. Martins; Tanya Araújo; Maria A. Santos; Miguel St Aubyn
  11. Who Becomes an Entrepreneur? Labor Market Prospects and Occupational Choice By Poschke, Markus
  12. Entrepreneurship, Collective Entrepreneurship and the Producer-Owned Firm By Bijman, Jos; Doorneweert, Bart
  13. The Human Development Index as a Criterion for Optimal Planning By Merwan Engineer; Ian King; Nilanjana Roy
  14. Adult longevity and economic take-off: from Malthus to Ben-Porath By de la CROIX, David

  1. By: Marisa Hidalgo-Hidalgo (Department of Economics, Universidad Pablo de Olavide); Iñigo Iturbe-Ormaetxe (Department of Economics, Universidad de Alicante)
    Abstract: This paper analyzes public intervention in education, taking into account the existence of two educational levels: basic education and college education. The government decides per capita expenditure at each level and the subsidy for college education. We explore the effect of transferring money from one level to the other on equity and efficiency. We find that there is always a policy reform that satisfies both the objectives of equity and efficiency, where efficiency refers to average productivity of college graduates. For developed countries, this policy consists of transferring resources from college education to basic education.
    Keywords: Basic education, college education, public expenditure in education.
    JEL: H52 I28 J24
    Date: 2008–11
  2. By: Strawinski, Pawel
    Abstract: In the article social rate of return to education is considered. As is pointed out in various research papers social return rate exceeds the pure technical rate of return by considerable margin. However, it is hard to calculate adequate figure due to methodological and data problems. The model used in the article is based on a comparative advantage theory. It contains two equations: one for technical and social rate of return to education, second deals with non-random selection for different education regimes. We find that private rate of return is over 7% yearly and therefore is still among the highest in Europe and there exists additional 1.5% social return to higher education.
    Keywords: return to education; private returns; external return
    JEL: O15 I22
    Date: 2008–06–05
  3. By: THARAKAN, Jo (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); TROPEANO, Jean-Philippe
    Abstract: We propose a model where imperfect matching between firms and workers on local labor markets leads to incentives for spatial agglomeration. We show that the occurrence of spatial agglomeration depends on initial size differences in terms of both number of workers and firms. Allowing for dynamics of workers' and firms' location choices, we show that the spatial outcome depends crucially on different dimensions of agents' mobility. The effect of a higher level of human capital on regional disparities depends on whether it makes workers more mobile or more specialized on the labor market.
    Keywords: economic geography, local labor market, regional disparities, human capital.
    JEL: J61 J42 R12
    Date: 2008–08
  4. By: Diego Amador
    Abstract: This paper simulates, within a partial equilibrium framework, the scenarios resulting form the implementation of several educational policies. Then, policies are compared according to their hypothetical results in terms of labor earnings inequality, as measured by the Gini coefficient. Results suggest that educational policies which attempt to guarantee medium qualification produce the lowest inequality even if dispersion in schooling years is high. Policies which attempt to raise tertiary education coverage but do not raise high school coverage as well, lead to rising inequality.
    Date: 2008–10–16
  5. By: Dunnewijk, Theo (UNU-MERIT)
    Abstract: Migration in a globalising world is on the increase, especially migration of the highly skilled. It is quite natural that given certain possibilities, people look for opportunities and chances to improve their lives. Especially when the better educated leave their country in large quantities to try their chances abroad it was labelled in the 1960's as "brain drain" stressing the negative welfare impact on the countries of origin (European at that time). However not always is the impact of migration negative for the country of origin and therefore "brain drain" turned into "brain gain" when it was seen from another perspective. Indeed destination as well as origin countries may profit from migrating highly skilled people. The road in the middle is called "brain strain" emphasising that out migration can be either positive or negative for the origin countries. A synthesis has been found in perceiving migration of the highly skilled in the more neutral phrase "brain circulation". Brain circulation perceives migration of the highly skilled not as an end in itself but as the start of a circular process in which everyone might be better off: in this view the knowledge worker in the age of globalisation turns into a real cosmopolite. Despite an enormous literature on migration it is impossible to draw a systematic global quantitative picture of migration of the highly skilled. Therefore discussions in terms of brain drain, brain strain or brain circulation are either theoretical or end unresolved. Empirically only a part of the picture can be drawn with the help of data on South-North migration of the highly skilled. Data on other directions of migration like South-South and North- South is not systematically covered by the international statistical institutes. Given this situation it is the aim of this paper to include as many as possible countries in the data on migration of the highly skilled in order to illustrate the major effects related to migration for human capital in origin as well as destination regions. This is possible by using UNESCO data on international students; this source facilitates estimations of the missing migration flows. The results show that countries like Russian Federation, South Africa, Ukraine, Malaysia, Jordan and Saudi Arabia are, apart from the traditional immigration countries also important destination countries for highly skilled migrants.
    Keywords: Migration, Diaspora, Highly Skilled Migrants, International Mobility, Internationally Mobile Students
    JEL: F22 J61 O15
    Date: 2008
  6. By: Nordin, Martin (Lund University); Persson, Inga (Lund University); Rooth, Dan-Olof (Kalmar University)
    Abstract: This paper adds to the small literature on the consequences of education-occupation mismatches. It examines the income penalty for field of education-occupation mismatches for men and women with higher education in Sweden and reveals that the penalty for such mismatches is large for both men and women. In fact, it is substantially larger than has been found for the US. Controlling for cognitive ability further establishes that the income penalty is not caused by a sorting by ability, at least for Swedish men. The income penalty for men decreases with work experience which is an indication that education-specific skills and work experience are substitutes to some extent. There is no evidence, though, that the mismatched individuals move to a matching occupation over time. Thus, for some, the income penalty seems to be permanent.
    Keywords: salary wage differentials, rate of return, human capital, educational economics
    JEL: I21 J24 J31
    Date: 2008–10
  7. By: Subbarao Srinivas P.
    Abstract: FDI has considered a major catalyst in promoting sustainable development in developing countries. FDI has the potential to generate employment, raise productivity, transfer skills and technology, increased income, enhance exports and contribute to the long-term economic development of the world’s developing countries. The investing countries usually supply superior technologies to the host countries. At the initial stages, however, the less developed countries (LDC) lack not only the necessary skills and infrastructure to attract FDI in high technology sector but also the knowledge for proper implementation of technology. Since this requires less technical capabilities, skill building in the host LDC is less. However, such skill building, even though small, creates a platform for the LDC to develop their existing technology and capital productivity. This helps in improving the human capital of the country by facilitating education and technical training to a greater mass of people. Eventually, with the development of the economy the country moves from the subsistence level to the point where the dependence on FDI gradually shifts from mere manufacturing level to the managerial level of a company. At this point of time, the LDC should aim at attracting effective FDI. By effective FDI, we mean the FDI that is development friendly – FDI that fosters not only growth of the nation, but also growth and development of each resident of the country. In other words, effective FDI indulges in enhancement of human capital of the country. The growth of an economy can sustain only though the growth of an increasing, economically productive labor force. This paper explains importance of human capital skilling, the relation between the FDI and Human Capital development besides the experiences of these two in different regions of the world i.e., Asian and Latin American experiences.
    Date: 2008–02–08
  8. By: Cardoso, Ana Rute (IAE Barcelona (CSIC)); Fontainha, Elsa (Technical University of Lisbon); Monfardini, Chiara (University of Bologna)
    Abstract: We analyze a mechanism that has been disregarded in the literature on parental investment in children, as little attention has been devoted to the choices made by children themselves. We model directly time use by youngsters into activities related to the acquisition of human capital, considering not just the decision on study time, but also on socialization/networking at young age, which can enhance personal interaction skills. We provide new empirical evidence for three European countries (France, Italy and Germany) on the link between time allocation by parents and time allocation by youngsters, highlighting country-specific patterns as well as cross-country differences. We run fractional regression models and double hurdle models on multi-member household micro data on time use. Countries diverge concerning the association between parents and youngsters allocation of time to socializing and to reading and studying activities, with Italy standing out as the country where that association, in particular between youngster and mother, is strongest. Our results are consistent with different mechanisms: parental role model directly influencing children behavior, intergenerational transmission of preferences, or network effects, as individuals adapt their behavior to social patterns.
    Keywords: study time, socializing, networking, youth, intergenerational transmission of preferences, fractional regression models, double hurdle models
    JEL: J22 J24 J13 C21 C24
    Date: 2008–11
  9. By: Niels-Hugo Blunch; Claus C Pörtner
    Abstract: This paper examines the effects of adult literacy program participation on household consumption in Ghana. We use community fixed effects combined with instrumental variables to account for possible endogenous program placement and self-selection into program participation. For households where none of the adults have completed any formal education we find a substantial, positive and statistically significant effect on household consumption. Our preferred estimate of the effect of participation for households without education is equivalent to a ten percent increase in consumption per adult equivalent. There is, however, little evidence that other households benefit from participation in terms of welfare. The improvements in literacy and numeracy rates are also mainly concentrated among participants with little or no formal schooling, although most participants appear to gain in skills to some extent. Taking account of both direct cost and opportunity cost we argue that the social returns to adult literacy programs are substantial.
    Date: 2005–09
  10. By: Teresa V. Martins; Tanya Araújo; Maria A. Santos; Miguel St Aubyn
    Date: 2008–09
  11. By: Poschke, Markus (McGill University)
    Abstract: Why do some people become entrepreneurs (and others don't)? Why are firms so heterogeneous, and many firms so small? To start, the paper briefly documents evidence from the empirical literature that the relationship between entrepreneurship and education is U-shaped, that many entrepreneurs start a firm "out of necessity", that most firms are small, remain so, yet persist in the market, and that returns to entrepreneurship have a much larger cross-sectional variance than returns to wage work. Popular models of firm heterogeneity cannot easily account for the U-shape or for the persistence of low-productivity firms. The paper shows that these facts can be explained in a model of occupational choice between wage work and entrepreneurship where agents are heterogeneous in their ability as workers, and starting entrepreneurs face uncertainty about their project's productivity. Then, if agents' expected productivity as entrepreneurs is increasing and not too concave in their ability as workers, the most and the least able individuals choose to become entrepreneurs. This sorting is due to heterogeneous outside options in the labor market. Because of their low opportunity cost, low-ability agents benefit disproportionately from the ability to pursue only good business projects and abandon low-productivity ones. This also makes them more likely to immediately abandon a project for a new one. Data from the NLSY79 gives support to these two predictions. Individuals with relatively high or low wages when employed, or with a high or low degree, are more likely to be entrepreneurs or to become entrepreneurs, and spend more time in entrepreneurship. Among entrepreneurs, more of the firms run by individuals with low wages when employed, or with a low degree, are abandoned after only a year.
    Keywords: occupational choice, entrepreneurship, firm entry, selection, search
    JEL: E20 J23 L11 L16
    Date: 2008–11
  12. By: Bijman, Jos; Doorneweert, Bart
    Abstract: Entrepreneurship is predominantly associated with the activities of an individual actor €Ӡ the entrepreneur. It has also been related to the concept of firm ownership (e.g. Foss and Klein, 2005). This may lead to the conjecture that a collectively-owned firm is a setting for collective entrepreneurship. However, such reasoning encounters a number of taxing questions. If entrepreneurship is usually related to the individual, how does the collective embody entrepreneurial spirit and lead to effective outcomes? These and other questions will be addressed in this paper, which is mainly based on a review of the literature. The paper starts by providing an overview of the different schools of (economic) thought on entrepreneurship. Subsequently we discuss the implications for the conceptualization of entrepreneurship when it is not carried out by an individual but by a group of people. Finally, the notion of collective entrepreneurship will be framed within the context of the producer-owned firm in agriculture, by considering conditions under which collective entrepreneurship can be attributed to the cooperative.
    Keywords: entreprepreneurship, cooperative, pro, Agribusiness, Industrial Organization,
    Date: 2008
  13. By: Merwan Engineer; Ian King; Nilanjana Roy
    Abstract: Planning strategies that maximize the Human Development Index (HDI) tend towards minimizing consumption and maximizing non-investment expenditures on education and health. Interestingly, such strategies also tend towards equitable outcomes, even though inequality aversion is not modelled in the HDI. A problematic feature of strategies that maximize the HDI is that the income component in the index only role is to distort the allocation between health and education expenditure. Because the income component does not play its intended role of securing resources for a decent standard of living, we argue that it is better to drop income from the index in considering optimal plans. Alternatively, we consider net income, income net of education and health expenditures, as indicator of capabilities not already reflected in the education and life expectancy components of the index. When net income is used in a modified HDI index, optimal plans yield a balance between allocations for consumption, education, and health. Finally, we calculate our modified indexes for OECD countries and compare them with the HDI.
    Keywords: Consumption; Human development index; Income; Inequality; Planning
    JEL: O21 O15
    Date: 2008
  14. By: de la CROIX, David (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Abstract: We propose four arguments favoring the idea that medical effectiveness, adult longevity and height started to increase in Europe before the industrial revolution. This may have prompted households to increase their investment in human skills as a response to longer lives and initiated the transition from stagnation to growth.
    Keywords: life expectancy, height, industrial revolution, human capital, adult mortality.
    JEL: J11 I12 N30 I20 J24
    Date: 2008–08

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