nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒02‒22
fifteen papers chosen by
Fabio Sabatini
University of Siena

  1. The Causal Effects of Education on Adaptability By Riddell, W. Craig; Song, Xueda
  2. Career Networks and Job Matching - Evidence on the Microeconomic Foundations of Human Capital Externalities By Daniel F. Heuermann
  3. The effect of childhood conduct disorder on human capital By Suncica Vujic; Pierre Koning; Dinand Webbink; Nick Martin
  4. What we know about relationship between training and firm performance: a review of literature By Thang, N.; Buyens, D.
  5. The Impact of AIDS on Income and Human Capital By Ferreira, Pedro Cavalcanti; Santos, Marcelo; Pessoa, Samuel
  6. Group Inequality By Samuel Bowles; Glenn C. Loury; Rajiv Sethi
  7. Raising Education Outcomes in Spain By Andrés Fuentes
  8. Access to Higher Education and Inequality: The Chinese Experiment By Belton Fleisher; Xiaojun Wang; Haizheng Li; Shi Li
  9. Human Resource challenges for growing SMEs. How Flemish entrepreneurs attract, develop and retain employees By Van Bruystegem, K.; Van De Woestyne, M.; Dewettinck, K.
  10. Following in Your Parents' Footsteps? Empirical Analysis of Matched Parent-Offspring Test Scores By Brown, Sarah; McIntosh, Steven; Taylor, Karl
  11. On a Class of human development index measures By Srijit Mishra; Hippu Salk Kristle Nathan
  12. Job Search, Bargaining, and Wage Dynamics By Shintaro Yamaguchi
  13. Does social capital create trust? Evidence from a community of entrepreneurs By Sabatini, Fabio
  14. The fragility of social capital By Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro
  15. The Skill Composition of Migration and the Generosity of the Welfare State By Alon Cohen; Assaf Razin; Efraim Sadka

  1. By: Riddell, W. Craig; Song, Xueda
    Abstract: This study investigates the causal effects of education on individuals’ adaptability to employment shocks. Specifically, we assess the extent to which education influences re-employment success for unemployed workers. We also examine the impact of education on job search intensity, one potential mechanism through which education may increase the probability of re-employment following unemployment. Given that the positive correlation between education and adaptability is likely to be confounded by the endogeneity of education, we make use of data on compulsory schooling laws to create instrumental variables to assess the causal effects of education on adaptability. Based on data from the Canadian Census and the Labour Force Survey, we find that education both significantly improves re-employment opportunities and exerts significant positive impacts on job search intensity for the unemployed.
    Keywords: Education, Human Capital, Adaptability, Displaced Workers, Unemployment, Job Search, Casual Effects, Compulsory Schooling Laws
    JEL: I21 J64
    Date: 2009–02–16
  2. By: Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: Inspired by the literature on the importance of career networks for the quality of labor market matches we investigate whether human capital externalities arise from higher job matching efficiency in skilled regions. Using two samples of highly qualified workers in Germany, we find that increasing the regional share of highly qualified workers by one standard deviation raises wages on the incidence of job change by up to three percent, pointing to the importance of improved job matching opportunities in human capital rich regions as a microeconomic source of human capital externalities. Evidence on regional differences in job change behavior suggests that human capital networks enable young workers to change jobs more easily and to thereby increase matching efficiency, which in turn reduces the overall number of job changes needed until an efficient match is reached. Benefits from improved matching opportunities predominantly arise from human capital networks enabling workers in skilled regions to change jobs within an industry and, thus, to capitalize on their industry-specific human capital.
    Keywords: Human Capital Externalities, Job Matching, Agglomeration Economies
    JEL: D62 J24 J31 R11
    Date: 2009–02
  3. By: Suncica Vujic; Pierre Koning; Dinand Webbink; Nick Martin
    Abstract: This paper estimates the longer-term effects of childhood conduct disorder on human capital accumulation and violent and criminal behaviour later in life using data of Australian twins. We measure conduct disorder with a rich set of indicators based on diagnostic criteria from psychiatry (e.g., aggression to people and animals, destruction of property, deceitfulness or theft, and/or serious violations of rules). Using ordinary least squares (OLS) and twin fixed effects (FE) estimation approaches, we find that early (pre-18) conduct disorder problems significantly affect both human capital accumulation and violent and criminal behaviour over the life course. For instance, within pairs of identical twins we find that conduct disorder reduces the probability of high school graduation with 4 to 13 percent points and increases the probability of being arrested with 7 to 16 percent points. Robustness checks suggest that these estimates may be lower bounds of the true effects of conduct disorder. In addition, we find that conduct disorder is more deleterious if these behaviours occur earlier in life. We conclude that childhood mental health problems have high human and financial costs for families and society at large. Effective treatments early in life might yield high returns.
    Keywords: conduct disorder; human capital; twins
    JEL: I2 K42
    Date: 2008–11
  4. By: Thang, N.; Buyens, D. (Vlerick Leuven Gent Management School)
    Abstract: This paper reviews theory and empirical findings on the relationship between training and firm performance. We describe the various important theoretical approaches and proposed a framework for analyzing training and firm performance issues. Data from previous studies is used to assess the effects of training on firm performance. The research results show that training has a positive and significant impact on firm performance. Finally, we identify the limitations of these previous studies and directions for future research on this topic.
    Keywords: Training; Human resource outcomes; Firm performance
    Date: 2008–12–12
  5. By: Ferreira, Pedro Cavalcanti; Santos, Marcelo; Pessoa, Samuel
    Abstract: This paper studies the impact of HIV/AIDS on per capita income and education. It ex- plores two channels from HIV/AIDS to income that have not been sufficiently stressed by the literature: the reduction of the incentives to study due to shorter expected longevity and the reduction of productivity of experienced workers. In the model individuals live for three periods, may get infected in the second period and with some probability die of Aids before reaching the third period of their life. Parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty. The simulations predict that the most affected countries in Sub-Saharan Africa will be in the future, on average, thirty percent poorer than they would be without AIDS. Schooling will decline in some cases by forty percent. These gures are dramatically reduced with widespread medical treatment, as it increases the survival probability and productivity of infected individuals.
    Date: 2009–02–12
  6. By: Samuel Bowles (Santa Fe Institute and University of Siena); Glenn C. Loury (Department of Economics, Brown University); Rajiv Sethi (Department of Economics, Barnard College, Columbia University and the Institute for Advanced Study)
    Abstract: This paper explores conditions under which inequality across social groups can emerge from initially group-egalitarian distributions and persist across generations despite equality of eco- nomic opportunity. These conditions arise from interactions among three factors: the extent of segregation in social networks, the strength of interpersonal spillovers in human capital accumu- lation, and the responsiveness of relative wages to the skill composition in production. Social segregation is critical in generating these results: group inequality cannot emerge or persist un- der conditions of equal opportunity unless segregation su¢ ciently great. We also show that if an initially disadvantaged group is su¢ ciently small, integration above a threshold level can induce both groups to invest more in human capital, while the opposite holds if the disadvantaged group is large.
    Keywords: segregation, networks, group inequality, human capital
    JEL: D31 Z13 J71
    Date: 2009–02
  7. By: Andrés Fuentes
    Abstract: Impressive progress has been made in raising participation in early childhood education as well as tertiary educational attainment over the past 30 years. However, the inflow of poorly educated youth into the labour market is unusually heavy for a high-income country, largely on account of high drop-out rates in lower secondary education which, in turn, reflect one of the highest grade repetition rates in the OECD. The supply of workers with intermediate vocational skills is surprisingly low, despite the high return, in terms of labour market outcomes that these skills offer, even if they have recently deteriorated. There is room to raise learning outcomes up to the end of compulsory school, as measured by the Programme for International Student Assessment (PISA), although, owing to a compressed distribution of such outcomes, the share of poorly performing pupils is not unusually large. While significant reforms have been undertaken to address these problems, more measures are needed to reduce grade repetition and raise education outcomes, by improving accountability of schools and school staff, as well as by raising school autonomy further than has already occurred. Vocational training needs to become more attractive. In tertiary education, few Spanish universities have attained a high level of international standing, and scope remains to improve the contribution tertiary attainment can make to gains in economic welfare, notably by reforming funding arrangements.<P>Améliorer les résultats de l’enseignement en Espagne<BR>En l’espace de trente ans, les effectifs des services d’éducation préscolaire et de l’enseignement supérieur ont progressé de manière spectaculaire. Pourtant, la proportion de jeunes peu qualifiés qui entrent sur le marché du travail est particulièrement élevée pour un pays à haut revenu, ce qui s’explique notamment par de forts taux d’abandon dans le premier cycle du secondaire, avec, en corollaire, l’un des taux de redoublement les plus élevés de la zone OCDE. L’offre de travailleurs possédant une formation professionnelle de niveau intermédiaire est singulièrement faible, malgré les grands avantages que ces qualifications procurent en termes de débouchés sur le marché du travail, encore que la situation dans ce domaine se soit récemment dégradée. Des possibilités s’offrent jusqu’à la fin de la scolarité obligatoire pour améliorer les résultats de l’enseignement, comme en témoigne l’étude du Programme international pour le suivi des acquis des élèves (PISA), même si la faible variance de ces résultats fait que la proportion des élèves faibles n’est pas particulièrement élevée. Des réformes importantes ont été entreprises pour résoudre ces problèmes, mais d’autres mesures sont nécessaires pour diminuer les redoublements et améliorer les résultats de l’enseignement. Il faut pour cela renforcer la responsabilité des établissements scolaires et de leur personnel, et développer leur autonomie. Par ailleurs, la formation professionnelle doit être rendue plus intéressante. S’agissant de l’enseignement supérieur, peu d’universités espagnoles ont acquis une réputation internationale, et il est possible de renforcer les avantages économiques résultant des formations supérieures, notamment en réformant les mécanismes de financement.
    Keywords: education, éducation, tertiary education, éducation tertiaire, Spain, Espagne, vocational training, formation professionnelle, secondary education, pre-school education, éducation secondaire, éducation préscolaire, primary education, éducation primaire, Rates of return to educational investment, university education, éducation universitaire, taux de rendement de l’éducation
    JEL: I2
    Date: 2009–02–17
  8. By: Belton Fleisher (Department of Economics, Ohio State University); Xiaojun Wang (Department of Economics, University of Hawaii at Manoa); Haizheng Li (School of Economics, Georgia Institute of Technology); Shi Li (School of Economics and Business, Beijing Normal University)
    Abstract: We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China’s reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and are negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional "wage-grid."
    Keywords: Return to schooling, selection bias, sorting gains, heterogeneity, financial constraints, comparative advantage, China
    JEL: J31 J24 O15
    Date: 2009–02
  9. By: Van Bruystegem, K.; Van De Woestyne, M.; Dewettinck, K. (Vlerick Leuven Gent Management School)
    Abstract: For Flemish entrepreneurs human resource management is one of the biggest challenges for further development and growth (Forum on Entrepreneurship, October 2006). Hence, this paper aims to shed light on how successful entrepreneurs in Flanders manage their human resources. Building on Greiner’s (1998) growth model and the model of Ulrich (1997), we conducted a qualitative study of various human resource practices within Flemish entrepreneurial firms in different sectors and stages of growth. We investigated the interplay between the focus of HRM and the growth phase of an SME. The main objective is to better understand the major challenges entrepreneurs experience when managing people during the first stages of company growth. Our findings suggest that HRM within growing SMEs shifts from an operational focus on people to a more strategic focus on procedures. Throughout the process of evolution entrepreneurs need to find the right balance of HR practices, paying attention to formalisation, delegation and coaching.
    Keywords: SME; HRM; small firms; growth phase
    Date: 2008–12–11
  10. By: Brown, Sarah (University of Sheffield); McIntosh, Steven (University of Sheffield); Taylor, Karl (University of Sheffield)
    Abstract: In this paper, we explore whether an intergenerational relationship exists between the reading and mathematics test scores, taken at age 7, of a cohort of individuals born in 1958 and the equivalent test scores of their offspring measured in 1991. Our results suggest that how the parent performs in reading and mathematics during their childhood is positively related to the corresponding test scores of their offspring as measured at a similar age. The results further suggest that the effect of upbringing is mainly responsible for the inter-generational relationship in literacy, while genetic effects seem more relevant with respect to numeracy.
    Keywords: human capital, intergenerational transfers, literacy, numeracy
    JEL: J13 J24
    Date: 2009–01
  11. By: Srijit Mishra (Indira Gandhi Institute of Development Research); Hippu Salk Kristle Nathan (Indira Gandhi Institute of Development Research)
    Abstract: Using Minkowski distance function we propose a class of Human Development Index measures. Special cases of this turn out to be the popularly used linear average method as also a newly proposed displaced ideal method. Two measures of penalty are suggested. One captures the non-uniform attainment across dimensions and the other captures the deviation from the ideal path. A method of adjusting for unequal weights is also provided.
    Keywords: Ideal path, Penalty, Minkowski distance function, Multiple dimensions, Uniform development
    JEL: D63 I31 O15
    Date: 2008–10
  12. By: Shintaro Yamaguchi
    Abstract: This paper constructs and estimates a model of strategic wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside option. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition results in wage growth even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the NLSY79. The results indicate that the improved value of outside option raises wages of ten-year-experienced workers by 16%.
    Date: 2009–01
  13. By: Sabatini, Fabio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Which kind of social capital fosters the diffusion of development-oriented trust? This paper carries out an empirical investigation into the causal relationships connecting four types of social capital (i.e. bonding, bridging, linking, and corporate), and different forms of trust (knowledge-based trust, social trust, trust towards public services and political institutions), in a community of entrepreneurs located in the Italian industrial district of the Tuscia. Our results suggest that the main factors fostering the diffusion of social trust among entrepreneurs are the perception that the local community is a safe place, and the establishment of corporate ties through professional associations. Trust in people is positively and significantly correlated also to higher levels of satisfaction and confidence in public services. Participation in voluntary organizations does not appear to increase trust in people. Rather, we find evidence of the other way round: interpersonal trust seems to encourage civic engagement.
    Keywords: Trust; Social capital; Safety; Professional associations; Entrepreneurship; Corporate ties; Group and Interpersonal Processes; Social Perception and Cognition
    JEL: A13 J24 O15 Z13
    Date: 2009–01–12
  14. By: Antoci, Angelo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Sabatini, Fabio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Sodini, Mauro (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: This paper addresses two hot topics of the contemporary debate, social capital and economic growth. Our theoretical analysis sheds light on decisive but so far neglected issues: how does social capital accumulate over time? Which is the relationship between social capital, technical progress and economic growth in the long run? The analysis shows that the economy may be attracted by alternative steady states, depending on the initial social capital endowments and cultural exogenous parameters representing the relevance of social interaction and trust in well-being and production. When material consumption and relational goods are substitutable, the choice to devote more and more time to private activities may lead the economy to a "social poverty trap", where the cooling of human relations causes a progressive destruction of the entire stock of social capital. In this case, the relationship of social capital with technical progress is described by an inverted U-shaped curve. However, the possibility exists for the economy to follow a virtuous trajectory where the stock of social capital endogenously and unboundedly grows. Such result may follow from a range of particular conditions, under which the economy behaves as if there was no substitutability between relational activities and material consumption.
    Keywords: Social capital; Technical progress; Social sphere; Economic action; Well-being; Social poverty trap
    JEL: A13
    Date: 2009–01–13
  15. By: Alon Cohen; Assaf Razin; Efraim Sadka
    Abstract: Skilled migrants typically contribute to the welfare state more than they draw in benefits from it. The opposite holds for unskilled migrants. This suggests that a host country is likely to boost (respectively, curtail) its welfare system when absorbing high-skill (respectively, low-skill) migration. In this paper we first examine this hypothesis in a politico-economic setup. We then confront the prediction of the theory with evidence. In doing so, we reckon with an endogeneity problem that arise because the skill composition of migration is itself affected by the generosity of the welfare state.
    JEL: F22 H55
    Date: 2009–02

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