nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒01‒31
twelve papers chosen by
Fabio Sabatini
University of Siena

  1. Human Capital: an Institutional Economics point of view By Germana Bottone
  2. Total Factor Productivity and Economic Growth in Indonesia By Pierre van der Eng
  3. Decomposition of Economic and Productivity Growth in Post-reform China. By Kui-Wai Li; Tung Liu; Lihong Yun
  4. Multidimensional Human Capital, Wages and Endogenous Employment Status in Ghana By Blunch, Niels-Hugo
  5. The Economics and Psychology of Inequality and Human Development By Flavio Cunha; James J. Heckman
  6. Innovation, human capital and earning distribution: towards a dynamic life-cycle approach By Vona, Francesco; Consoli, Davide
  7. Upgrading the Low Skilled: Is Public Provision of Formal Education a Sensible Policy? By Stenberg, Anders
  8. Employers’ Perspectives on the Roles of Human Capital Development and Management in Creating Value By Bo Hansson
  9. Education and Early Career Outcomes of Second-Generation Immigrants in France By Christian Belzil; François Poinas
  10. Low-Skilled Immigration and the Expansion of Private Schools By Dottori, Davide; Shen, I-Ling
  11. An Alternative approach to measure HDI By Hippu Salk Kristle Nathan; Srijit Mishra; B. Sudhakara Reddy
  12. Intangible Assets and Intellectual Capital as Key Factors of Romania’s Convergence By Suciu, Marta Cristina

  1. By: Germana Bottone (ISAE)
    Abstract: Human capital is usually defined as “The aggregation of investments, such as education and on the job training that improves the individual’s productivity in the labour market”. The initial definition did not take into account some central aspects of “human capital”, owing to a supposed analogy with physical capital. But even though, from an economic point of view, there are some similarities, human beings are more complex than automatic machines. More recently, it has been attempted to articulate a more extensive definition of “human capital” by considering all the attributes embodied in individuals relevant to economic activity”. Nevertheless, the evolution of human capital definition is in some way restricted to its economic meaning, neglecting the intrinsic complexity of the concept that demands an in-depth re-examination of its social and cultural value. In order to achieve deeper understanding of the multiplicity of aspects making up human capital, we are going to make use of the main concepts of institutional and evolutionary economics..
    Keywords: Human capital, Institutional Economics, lifelong learning, Institutional quality
    JEL: J24 J31
    Date: 2008–12
  2. By: Pierre van der Eng
    Abstract: This paper revisits the discussion about the contribution of Total Factor Productivity (TFP) growth to Indonesia’s economic growth during 1970-2007. It re-estimates the contribution of TFP to economic growth during this period on the basis of new estimates of GDP, capital stock, education-adjusted employment, and factor income shares. After accounting for the growth of capital stock and education-adjusted employment, the residual TFP growth was on average -0.2% per year during 1971- 2007. Capital stock growth and education-augmented employment growth explained 70% and 34%, respectively, and TFP growth -4%. Only during 2000-07 was TFP growth 1.7% per year, explaining 33% of GDP growth. The paper doubts that these results imply that the Indonesian economy did not experience the impact of technological change, as much of it may be embodied in the capital stock estimates.
    Keywords: economic growth, Indonesia, productivity
    JEL: N15 O11 O47 O53
    Date: 2009
  3. By: Kui-Wai Li (City University of Hong Kong, Hong Kong SAR); Tung Liu (Department of Economics, Ball State University); Lihong Yun (City University of Hong Kong, Hong Kong SAR)
    Abstract: This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China’s post-reform economy. The four attributes of economic growth are input growth, adjusted economies of scale effect, technical progress, and efficiency growth. A stochastic frontier model is used to estimates the growth attributes, and a human capital variable is incorporated in the translog production function. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale economies has become important in recent years, but technical efficiency has edged downwards in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.
    Keywords: technical progress, technical efficiency, economies of scale, human capital, China economy
    JEL: C2 D24 O4 O53
    Date: 2008–12
  4. By: Blunch, Niels-Hugo (Washington and Lee University)
    Abstract: Previous studies of labor market outcomes such as employment and wages have mostly been limited to investigating the impact of formal schooling only and, as a consequence, have seldom considered skills or alternative routes to acquiring skills, such as adult literacy programs, or other types of education. This paper examines these issues for Ghana, by estimating the joint effects of formal schooling, literacy and numeracy skills, and adult literacy programs on employment and wage outcomes. Wage and employment status equations are estimated jointly, allowing employment status to be endogenous. Substantial returns to basic cognitive skills are established, while the education system – especially the lower levels of formal education – is found to be relatively successful in creating these skills. At the same time the results hint at there being substantial returns to skills other than basic literacy and numeracy. These skills appear to be produced mostly from technical and vocational education and training and at higher levels of formal education. Adult literacy participants are less likely to be economically inactive and more likely to be self-employed, hinting at the income-generating activities component of these programs having indirect effects on wages through its effect on labor market participation, especially for females, individuals with no formal education, and in urban areas.
    Keywords: wage equations, employment status, human capital, literacy and numeracy, cognitive and non-cognitive skills, formal education, adult literacy programs, Ghana
    JEL: I31 J24 O15
    Date: 2008–12
  5. By: Flavio Cunha; James J. Heckman
    Abstract: Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
    JEL: A12
    Date: 2009–01
  6. By: Vona, Francesco; Consoli, Davide
    Abstract: Empirical anomalies in the dynamics of earnings following the emergence of new ICT technologies are not consistent with various re-elaborations of the human capital theory. The first part of the paper reviews critically this literature and highlights an important gap concerning the role of institutional infrastructures for the systematisation and diffusion of new knowledge. The dynamic life-cycle approach elaborated in the second part provides a coherent account of the evidence, and indicates interesting implications for innovation and educational policies.
    Keywords: Innovation; Human Capital; Earning Distribution;
    JEL: J24 D8 O31
    Date: 2009–01–27
  7. By: Stenberg, Anders (Swedish Institute for Social Research, Stockholm University)
    Abstract: At various political levels, including the OECD and the EU, it is repeatedly emphasized that upgrading the low skilled is an important area for the economic and social development of modern societies. Employers are typically reluctant to train low skilled, who in their turn are unwilling to participate due to financial constraints or a perception of low quality and/or returns to training. If this is a market imperfection, a possible remedy is suggested by public provision of formal education where enrollees are eligible for financial support. However, the costs may be large and the economic returns to formal adult education (AE) for low skilled, a crucial measure to assess if expenses should be increased or decreased, is a virtually unexplored issue. This study uses Swedish register data 1990-2004 of low skilled siblings aged 24-43 in 1994 to estimate difference-indifference- in-differences models which include family fixed effects. It is found that a year of AE improves earnings by 4.4 per cent, but calculations indicate that the private returns alone only roughly cover the costs incurred by society, implying that social returns to AE are needed to justify the expenses.
    Keywords: Human capital; adult education; earnings
    JEL: H30 H52 I20 J24 O30
    Date: 2009–01–19
  8. By: Bo Hansson
    Abstract: Human capital – the productive capacity that is embedded in people – is one of the most important contributors to the growth in nations’ output and standard of living. Globalisation and technological change have increased the importance of human capital in recent years, to the point that there are now only two options to sustain high profits and high wages in developed nations: escalating the skill levels of individuals or developing superior capacity for managing those skills and “human capital” more broadly. Employers have responded to these new phenomena by increasing wages for employees with more skills and by increasing their use of downsizing and other methods (such as “offshoring”) intended to reduce labour costs. There is little evidence, however, that such efforts by employers have improved profits, productivity, or stock price performance. Employer-provided training for employees represents one method of improving the skill level of a nation’s workforce. Although long-standing economic theory suggests that existing incentives for employers and employees should naturally yield the delivery of an optimal level of training, there is new awareness of a variety of market failures that may be causing a sub-optimal level of training, despite evidence that points to a positive relationship between employer-provided training and firm outcomes (productivity, profitability, employee retention, customer retention, stock performance).<BR>Le capital humain – la capacité productive qui est une partie intégrante de chacun – est une des plus importantes contributions à la croissance économique et des niveaux de vie des nations. La mondialisation et les changements technologiques ont augmenté l’importance du capital humain ces dernières années, au point qu’il existe désormais seulement deux options pour maintenir des profits importants et de hauts salaires dans les pays développés : intensifier les niveaux de compétences des personnes ou développer une plus grande capacité à gérer ces compétences et le « capital humain » de façon plus étendue. Les employeurs ont répondu à ces nouveaux phénomènes en augmentant les salaires des employés plus qualifiés et en ayant plus souvent recours à la réduction de personnel et à d’autres méthodes (telles que le « offshoring ») dans le but de réduire le coût de la main-d’oeuvre. Il n’est cependant pas vraiment prouvé que de tels efforts de la part des employeurs aient augmenté les profits, la productivité ou encore les performances des résultats boursiers. La formation des employés fournie par les employeurs représente une méthode d’amélioration du niveau de compétences de la main d’oeuvre d’un pays. Bien qu’une théorie économique de longue date suggère que les motivations pour les employeurs et les employés devraient naturellement réaliser la provision d’un niveau de formation optimal, il a été récemment fait le constat d’une variété de failles du marché qui peut résulter à un niveau sous-optimal de la formation, malgré les preuves démontrant une relation positive entre la formation fournie par l’employeur et les résultats des entreprises (productivité, rentabilité, maintien des employés dans l’entreprise, maintien de la clientèle, résultats boursiers).
    Date: 2009–01–19
  9. By: Christian Belzil (Ecole Polytechnique, Département d'économie, Palaiseau, F-91128, France); François Poinas (Université de Lyon, Lyon, F-69003, France; CNRS, GATE, UMR 5824, Ecully, F-69130, France)
    Abstract: We estimate a exible dynamic model of education choices and early ca- reer employment outcomes of the French population. Individuals are allowed to choose between 4 options: continue to the next grade, accept a perma- nent contract, accept a temporary contract, or withdraw from the labor force (a residual state). Our analysis focuses on the comparison between French Second-Generation Immigrants whose parents are born in Africa and French- natives. We nd that schooling attainments explain around two thirds of the dierences in access to early career employment stability. However, one third cannot be linked to observed investment in human capital.
    Keywords: Second-generation immigrants, schooling attainments, fixed term employment
    JEL: I2 J15 J24 J41
    Date: 2008
  10. By: Dottori, Davide (Catholic University of Louvain); Shen, I-Ling (University of Geneva)
    Abstract: This paper provides a political-economic model to study the impact of low-skilled immigration on the host country's education system, which is characterized by sources of school funding, the average expenditure per pupil, and the type of parents who are more likely to send their children to publicly or privately funded schools. Four main effects of immigration are considered: (1) greater congestion in public schools; (2) a lower average tax base for education funding; (3) reduced wages for low-skilled workers and so more dependence by low-skilled locals on public education; (4) a greater skill premium, which makes it easier for high-skilled locals to afford private education for their children, and hence weakens their support for financing public school. It is found that when the size of low-skilled immigrants is large, the education regime tends to become more segregated with wealthier locals more likely to opt out of the public system into private schools. The fertility differential between high and low-skilled locals increases due to a quantity/quality trade-off. The theoretical predictions are consistent with empirical evidence from both the U.S. census data and the OECD Programme for International Student Assessment (2003).
    Keywords: voting, taxes and subsidies, education, fertility, migration
    JEL: H42 H52 I21 D72 O15
    Date: 2009–01
  11. By: Hippu Salk Kristle Nathan (Indira Gandhi Institute of Devleopment Research); Srijit Mishra (Indira Gandhi Institute of Development Research); B. Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: The popularly known Human Development Index (HDI) is obtained through linear averaging (LA) of indices in three dimensions - health, education and standard of living. LA method assumes perfect substitutability among the indices. We question its appropriateness and propose an alternative measure, which is the inverse of the Euclidian distance from the ideal. Following Zeleny (1974), we refer to this, as the Displaced Ideal (DI) method. Through an axiomatic characterization, the paper shows that the advantages in the DI method are the following. Uniform, as against skewed, development is rewarded. Through an ideal path, it signals a future course of action. These signify that a given increment in any one dimension, with other dimensions remaining constant, has a greater significance for the index at a lower level than at a higher level. In other words, stagnancy in the dimension that has a lower value is more serious than stagnancy in other dimensions. Finally, an empirical illustration has been done by taking the statistics in Human Development Report 2006. We strongly propose that the DI method be considered over the LA method in the construction of HDI.
    Keywords: Displaced ideal, Euclidian distance, Ideal point, Linear averaging, Uniform development
    JEL: D63 I31 O15
    Date: 2008–01
  12. By: Suciu, Marta Cristina
    Abstract: The main aim of the chapter is to provide the readers with a synthesis of the new international framework of debate dedicated to the topics of intangible assets and intellectual capital. Considering the topics of the whole book, this chapter is focussed on the role played by intangible assets and intellectual capital for attaining convergence and for increasing competitiveness. * Study within the CEEX Programme – Project No. 220/2006 “Economic Convergence and Role of Knowledge in Relation to the EU Integration”.
    Keywords: convergence, knowledge-based economy, competitiveness, competitive advantage, intangible assets, intellectual capital
    JEL: E24 I23 I28 J24 O15 O47
    Date: 2009–01

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