nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒05‒02
six papers chosen by
Fabio Sabatini
University of Siena

  1. Health Human Capital, Height and Wages in China By Wenshu Gao; Russell Smyth
  2. Wages and Human Capital in the U.S. Financial Industry: 1909-2006 By Philippon, Thomas; Reshef, Ariell
  3. Bringing Growth Theory "Down to Earth" By Lopez, Ramon; Stocking, Andrew
  4. Education in Italy: is there any return? By Germana Bottone
  5. The Economic Return on New Immigrants' Human Capital: the Impact of Occupational Matching By Goldmann, Gustave; Sweetman, Arthur; Warman, Casey
  6. Schooling Inequality, Crises, and Financial Liberalization in Latin America By Jere R. Behrman; Nancy Birdsall; Gunilla Pettersson

  1. By: Wenshu Gao; Russell Smyth
    Abstract: We estimate the returns to height using data from 12 Chinese cities. We present both ordinary least squares (OLS) and two-stage least squares (TSLS) estimates. In the latter height is instrumented using proxies for health human capital accumulated in childhood and adolescence, which influence adult height. The OLS estimates suggest that an additional centimetre of adult height is associated with wages being 1.1 per cent higher for males and 0.9 per cent higher for females. The TSLS estimates suggest each additional centimetre of adult height is associated with wages being 4.8 per cent higher for males and 10.8 per cent for females. The difference reflects the fact that the OLS estimates are predominantly determined by the random genetic factors influencing height, while the TSLS estimates also take into account returns from investment in health human capital during childhood and adolescence. These results imply considerable returns to investment in health human capital.
    Keywords: China, health, height, wages
    JEL: I10 J15 J31 J71
    Date: 2009–04
  2. By: Philippon, Thomas; Reshef, Ariell
    Abstract: We use detailed information about wages, education and occupations to shed light on the evolution of the U.S. financial sector over the past century. We uncover a set of new, interrelated stylized facts: financial jobs were relatively skill intensive, complex, and highly paid until the 1930s and after the 1980s, but not in the interim period. We investigate the determinants of this evolution and find that financial deregulation and corporate activities linked to IPOs and credit risk increase the demand for skills in financial jobs. Computers and information technology play a more limited role. Our analysis also shows that wages in finance were excessively high around 1930 and from the mid 1990s until 2006. For the recent period we estimate that rents accounted for 30% to 50% of the wage differential between the financial sector and the rest of the private sector.
    Keywords: finance; human capital; regulation; wages
    JEL: G0 J0 N0 O0
    Date: 2009–04
  3. By: Lopez, Ramon; Stocking, Andrew
    Abstract: Explicitly accounting for certain basic physical laws governing the âearthâ sector dramatically enriches our ability to explain a high degree of diversity in observed patterns of economic growth. We provide a theoretical explanation of why some countries have been able to sustain a more or less constant and positive rate of economic growth for many decades while so many others have failed to do so. The analysis predicts that countries that have an over abundance of physical capital (a concept that is precisely defined in the text) may be unable to sustain a positive rate of economic growth over the long run. Too much physical capital may affect the dynamics of the economy ultimately leading to stagnation. The plausibility of the growth model introduced here is demonstrated by its ability to predict some important stylized facts for which standard endogenous growth models generally cannot account.
    Keywords: endogenous growth theory, unbalanced growth, structural change, stagnation, Environmental Economics and Policy, International Development, Labor and Human Capital, Political Economy, E22, Q01, O41,
    Date: 2009
  4. By: Germana Bottone (ISAE - Institute for Studies and Economic Analyses)
    Abstract: The “return to education” issue has been widely investigated in the economic literature. However, how the social value of education can affect its economic return and individual decisions on “human capital” investments has been somewhat neglected. The paper criticises the traditional definition of human capital and the premises of Becker’s equation and considers the following questions: does education have a consistent return in Italy? If not, does education have any social value?. From an economic point of view and at a conceptual level, numerous difficulties arise when one seeks to define “human capital”. One may make a list of factors endogenous to an individual, such as education, training and ability, and of factors exogenous to him/her such as level of family education, social capital, system of relations, freedom of knowledge transmission, institutions. All of these factors may affect “human capital”. Moreover, the decision to invest in “human capital” may not be completely rational. Rationality would probably instead suggest on-the-job training and training. Education has a cultural, social and historical value; as a consequence, individuals may make decisions about the proper investment in education not only by considering marginal costs and future benefits of that investment, but for other reasons as well.
    Keywords: human capital, bounded rationality, institutional economics.
    JEL: J24 J31
    Date: 2009–03
  5. By: Goldmann, Gustave; Sweetman, Arthur; Warman, Casey
    Abstract: Using a data set that provides information on source country employment, we examine the effect of source and host country occupational matching on earnings and the economic rate of return to the foreign human capital of immigrants in Canada. Examining occupational distributions we find that immigrants converge very quickly to the skill distribution of the Canadian population in terms of the main job worked, although four years after landing they are still below the source country distribution. We also find that for a large proportion of immigrants, their intended occupation differs from their source country occupation. Although immigrants who are able to match their source and host country occupations obtain higher earnings, successful occupational matching does not have any impact on the return to foreign potential work experience. However, immigrants who match their source and host country occupations do have a higher return to schooling, particularly for females.
    Keywords: Immigrants, Occupational Matching, Human Capital, Canada
    JEL: J24 J31 J61
    Date: 2009–04–22
  6. By: Jere R. Behrman; Nancy Birdsall; Gunilla Pettersson
    Abstract: Latin America is characterized by high and persistent schooling, land, and income inequalities and extreme income concentration. In a highly unequal setting, powerful interests are more likely to dominate politics, pushing for policies that protect privileges rather than foster competition and growth. As a result, changes in policies that political elites resist may be postponed in high-inequality countries to the detriment of overall economic performance. This paper examines the relationship between structural, high inequality—measured by high levels of schooling inequality—and liberalization of the financial sector for a sample of 37 developing and developed countries for the period 1975 to 2000. Liberalization of the financial sector can be broadly thought of in the Latin American pre-2000 context as opening credit markets that earlier were largely restricted, including by ending directed credit. For our measure of structural inequality we use data on schooling Gini coefficients that have not previously been used in this context. In our sample, we find that increases in financial liberalization were associated with bank crises and other domestic and external shocks, and that higher schooling inequality reduces the impetus for liberalization brought on by bank crises.
    Keywords: Latin America, education, inequality, financial liberalization
    Date: 2009–03

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