nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒01‒10
seven papers chosen by
Fabio Sabatini
University of Siena

  1. On the Implications of Two-way Altruism in Human-Capital-Based OLG Model By Aoki, Takaaki
  2. Skill, Luck, Overconfidence, and Risk Taking By Natalia Karelaia; Robin Hogarth
  3. Entrepreneurial Success and Failure: Confidence and Fallible Judgement By Robin Hogarth; Natalia Karelaia
  4. Repeated Job Quits: Stepping stones or learning about quality? By Gielen Anne C.
  5. Higher Education and Health Investments: Does More Schooling Affect Preventive Health Care Use? By Jason M. Fletcher; David Frisvold
  6. What determines adult cognitive skills?: Impacts of preschooling, schooling, and post-schooling experiences in Guatemala By Behrman, Jere R.; Hoddinott, John; Maluccio, John A.; Soler-Hampejsek, Erica; Behrman, Emily L.; Martorell, Reynaldo; Ramírez-Zea, Manuel; Stein, Aryeh D.
  7. Equity and Efficiency in Education: motivations and targets By Neri, Marcelo

  1. By: Aoki, Takaaki
    Abstract: This article summarizes some propositions regarding economic dynamics and implications of two-way altruism, on the basis of the human-capital-based OLG model of Ehrlich and Lui (1991) and Ehrlich and Kim (2007) with application of a modified, fertility-endogenized definition of linearly separable two-way altruism examined by Abel (1987) and Altig and Davis (1993). Some properties in both a transition process and a steady state, and the effect of unfunded social security on an equilibrium path are also discussed. My calibration results and analyses show that (1) the combination of altruism toward parents and children is crucial for determining a threshold level of initial human capital and productivity in a transition process (stagnant to growth or growth to stagnant), and the generation’s attained utility, (2) dynamic consistency might not necessarily be the best choice to overpass the stumbling block against growth regime, (3) in this human-capital-based OLG model, a regular recursive induction approach might still cause inefficiency in terms of an ex-post Pareto optimality criterion as of two periods later, even if strategic effects for after children (two generations later) are appropriately taken account of, and (4) unfunded social security tax, which involves actuarially fair insurance as well as certainty premium transfer, does affect critical values for a regime change as well as dynamic equilibrium paths and corresponding subsequent life strategies, even in two-way altruistic economy.
    Keywords: Two way altruism; Dynamic consistency; Dynamic efficiency; Unfunded social security; Human capital; Fertility; Overlapping generation model
    JEL: O10 D10 H00 D60
    Date: 2008–04
  2. By: Natalia Karelaia; Robin Hogarth
    Abstract: In most naturally occurring situations, success depends on both skill and chance. We compare experimental market entry decisions where payoffs depend on skill alone and combinations of skill and luck. We find more risk taking with skill and luck as opposed to skill alone, particularly for males, and little overconfidence. Our data support an explanation based on differential attitudes toward luck by those whose self-assessed skills are low and high. Making luck more important induces greater optimism for the former, while the latter maintain a belief that high levels of skill are sufficient to overcome the vagaries of chance.
    Keywords: Skill, luck, overconfidence, optimism, competition, gender differences, risk taking
    JEL: C91 D81
    Date: 2008–12
  3. By: Robin Hogarth; Natalia Karelaia
    Abstract: Excess entry – or the high failure rate of market-entry decisions – is often attributed to overconfidence exhibited by entreprene urs. We show analytically that whereas excess entry is an inevitable consequence of imperfect assessments of entrepreneurial skill, it does not imply overconfidence. Judgmental fallibility leads to excess entry even when everyone is underconfident. Self-selection implies greater confidence (but not necessarily overconfidence) among those who start new businesses than those who do not and among successful entrants than failures. Our results question claims that “entrepreneurs are overconfident” and emphasize the need to understand the role of judgmental fallibility in producing economic outcomes.
    Keywords: Excess entry, fallible judgment, overconfidence, skill uncertainty, entrepreneurship
    JEL: D80 L26 M13
    Date: 2008–12
  4. By: Gielen Anne C. (ROA rm)
    Abstract: Despite the fact that worker quits are often associated with wage gains and higheroverall job satisfaction, many workers quit once again within one or two years afterchanging jobs initially. Such repeated job quit behavior may arise as a steppingstone to better quality jobs (Burdett, 1978) or as a response to unexpectedly lowjob quality (Jovanovic, 1979).This paper tests the validity of both explanations using data from the UK labormarket in order to improve our understanding of job search behavior. Results frompanel estimations of job quits and job satisfaction illustrate that the labor market ischaracterized by elements of both explanations. More specifically, a variancedecomposition shows that the stepping stone model explains 80 percent ofrepeated job quit behavior; the remaining 20 percent is the result of learning aboutjob quality. Hence, workers appear to need several job quits to find their mostpreferred job and multiple job quits serve as a stepping stone to more satisfaction atwork.
    Keywords: education, training and the labour market;
    Date: 2008
  5. By: Jason M. Fletcher; David Frisvold
    Abstract: While it is well-known that individuals with higher levels of education consume more preventive medical care, there are several potential explanations for this stylized fact. These explanations include causal and non-causal mechanisms, and distinguishing among explanations is relevant for accessing the importance of educational spillovers on lifetime health outcomes as well as uncovering the determinants of preventive care. In this paper, we use regression analysis, sibling fixed effects, and matching estimators to attempt to distinguish between causal and non-causal explanations of the impact of education on preventive care. In particular, we use a cohort of 10,000 Wisconsin high school graduates that has been followed for nearly 50 years and find evidence that attending college increases the likelihood of using several types of preventive care by approximately five to fifteen percent for college attendees in the early 1960s. This effect of greater education operates partly through occupational channels and access to care. These findings suggest that increases in education have the potential to spillover on long-term health choices.
    Date: 2008–11
  6. By: Behrman, Jere R.; Hoddinott, John; Maluccio, John A.; Soler-Hampejsek, Erica; Behrman, Emily L.; Martorell, Reynaldo; Ramírez-Zea, Manuel; Stein, Aryeh D.
    Abstract: "Most investigations into the importance and determinants of adult cognitive skills assume that (1) they are produced primarily by schooling, and (2) schooling is statistically predetermined or exogenous. This study uses longitudinal data collected in Guatemala over 35 years to investigate production functions for adult cognitive skills—that is, reading-comprehension skills and nonverbal cognitive skills—as being dependent on behaviorally determined preschooling, schooling, and post-schooling experiences. We use an indicator of whether the child was stunted (child height-for-age Z-score < –2) as our representation of preschooling experiences, and we use tenure in skilled occupations as our representation of post-schooling experiences. The results indicate that assumptions (1) and (2) lead to a substantial overemphasis on schooling and an underemphasis on pre- and post-schooling experiences. The magnitudes of the effects of these pre- and post-schooling experiences are large. For example, the impact on reading-comprehension scores of not being stunted at age 6 is equivalent to the impact of four grades of schooling. These findings also have other important implications. For example, they (1) reinforce the importance of early life investments; (2) point to limitations in using adult schooling to represent human capital in the cross-country growth literature; (3) support the importance of childhood nutrition and work complexity in explaining the “Flynn effect,” or the substantial increases in measured cognitive skills over time; and (4) lead to doubts about the interpretations of studies that report productivity impacts of cognitive skills without controlling for skill endogeneity." from authors' abstract
    Keywords: Human capital, cognitive skills, Stunting, work experience, Development, Education, Gender, Health and nutrition,
    Date: 2008
  7. By: Neri, Marcelo
    Abstract: The recently released "Educational PAC" attempts to place basic education at the center of the social debate. We have subsidized this debate, offering a diagnosis of how different education levels can impact individuals' lives through broad and easily interpreted indicators. Initially, we analyze how much each educational level reaches the poorest population. For example, how are those in the bottom strata of income distribution benefited by childcare centers, private secondary education, public university or adult education. The next step is to quantify the return of educational actions, such as their effects on employability and an individual's wages, and even health as perceived by the individual, be that individual poor, middle class or elite. The next part of the research presents evidence of how the main characters in education, aka mothers, fathers and children, regard education. The site available with the research presents a broad, user-friendly database, which will allow interested parties to answer their own questions relative to why people do not attend school, the time spent in the educational system and returns to education, which can all be cross-sectioned with a wide array of socio-demographic attributes (gender, income, etc.) and school characteristics (is it public, are school meals offered, etc.) to find answers to: why do young adults of a certain age not attend school? Why do they miss classes? How long is the school day? Aside from the whys and hows of teaching, the research calculates the amount of time spent in school, resulting from a combination between absence rates, evasion raters and length of the school day. The study presents ranks of indicators referring to objective and subjective aspects of education, such as the discussion of the advantages and care in establishing performance based incentives that aim at guiding the states in the race for better educational indicators.
    Date: 2008–12

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