nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒10‒17
eight papers chosen by
Fabio Sabatini
University of Siena

  1. How important is human capital? A quantitative theory assessment of world income inequality By Andrés Erosa; Tatyana Koreshkova; Diego Restuccia
  2. Education and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth By Verbic, Miroslav; Majcen, Boris; Cok, Mitja
  3. Getting a Job through Voluntary Associations: the Role of Network and Human Capital Creation By Giacomo degli Antoni
  4. Who Leaves, Where to, and Why Worrry? Employee Mobility, Employee Entrepreneurship, and Effects on Source Firm Performance By Benjamin Campbell; Martin Ganco; April Franco; Rajshree Agarwal
  5. Environmental policy, education and growth: A reappraisal when lifetime is finite By Xavier Pautrel
  6. Human Capital Spillovers in the Workplace: Labor Diversity and Productivity By Navon, Guy
  7. What Drives the Skill Premium: Technological Change or Demographic Variation? By Hui He
  8. Selection and Serial Entrepreneurs By Jing Chen

  1. By: Andrés Erosa (IMDEA Ciencias Sociales); Tatyana Koreshkova (Concordia University and CIREQ); Diego Restuccia (University of Toronto)
    Abstract: We develop a quantitative theory of human capital investments in order to evaluate the magnitude of cross-country differences in total factor productivity (TFP) that explains the variation in per-capita incomes across countries. We build a heterogeneous-agent economy with cross-sectional variation in ability, schooling, and expenditures on schooling quality. By embedding our analysis in a growth model with tradable and non-tradable sectors, we model sectorial productivity differences across countries, as documented in Hsieh and Klenow (2007). The parameters governing human capital production and random ability and taste processes are restricted by a set of cross-sectional data moments such as variances and intergenerational correlations of earnings and schooling, as well as slope coefficient and R2 in a Mincer regression. Our main finding is that human capital accumulation strongly amplifies TFP differences across countries: To explain a 20-fold difference in the output per worker the model requires a 5-fold difference in the TFP of the tradable sector, versus an 18-fold difference if human capital is fixed across countries. Moreover, we find that sectorial productivity differences play a prominent role in quantitative implications of the theory.
    Date: 2009–09–30
  2. By: Verbic, Miroslav; Majcen, Boris; Cok, Mitja
    Abstract: In the article we model education and human capital as major endogenous growth elements in a small open economy general equilibrium framework and consider several policy scenarios for Slovenia. Decrease of the PIT rate and increase of government spending on education turned out to be the most effective policy measures. It is important, though, to understand its transitory dynamic. Namely, as education expenditure is increased, certain amount of labour is temporarily withdrawn from its productive use and put into the educational system. Higher skill upgrade of labour requires longer and higher short-term labour force decrease, but also provides us with higher long-term growth. The households that would gain more utility from such policy scenarios are those with more skilled labour and thus higher income level.
    Keywords: education; endogenous growth; general equilibrium modelling; Slovenia
    JEL: C68 E24 D58 H52
    Date: 2009
  3. By: Giacomo degli Antoni (University of Milan - Bicocca)
    Abstract: The present paper draws on an original dataset collected by the author to investigate if: i)the relational network and the human capital developed by unemployed volunteers through their associational membership are useful in finding a job; ii)the likelihood to get a job is higher for volunteers who take part in activities capable of increasing social networks and human capital. Data show that a considerable percentage of volunteers (24%) who were out of work when they joined their association obtained a job thanks to their associational participation. In particular, personal declarations of unemployed respondents reveal that 12% of them found a job thanks to the skills developed by working in the association, 10% thanks to information received by people met through the association and 2% for other reasons concerning the associational membership. Moreover, the econometric analysis shows that some activities related to the creation of social network (the frequency of participation in informal meetings and work groups) and human capital (the attendance at training courses) positively and significantly affect the probability to get a job if unemployed.
    Keywords: Voluntary Associations; Job Opportunities; Social Network; Human Capital
    JEL: L31 A14 J64 D85 J24
    Date: 2009–09
  4. By: Benjamin Campbell; Martin Ganco; April Franco; Rajshree Agarwal
    Abstract: We theorize that differences in human assets’ ability to generate value are linked to exit decisions and their effects on firm performance. Using linked employee-employer data from the U.S. Census Bureau on legal services, we find that employees with higher earnings are less likely to leave relative to employees with lower earnings, but if they do leave, they are more likely to move to a spin-out instead of an incumbent firm. Employee entrepreneurship has a larger adverse impact on source firm performance than moves to established firms, even controlling for observable employee quality. Findings suggest that the transfer of human capital, complementary assets, and opportunities all affect mobility decisions and their impact on source firms.
    Date: 2009–09
  5. By: Xavier Pautrel (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: This article demonstrates that when finite lifetime is introduced in a Lucas (1988) growth model where the source of pollution is physical capital, the environmental policy may enhance the growth rate of a market economy, while pollution does not influence educational activities, labor supply is not elastic and human capital does not enter the utility function. The result arises from the “generational turnover effect” due to finite lifetime. It remains valid under conditions when the education sector uses final output besides time to accumulate human capital. Nevertheless, it does no longer hold when the source of pollution is output. Furthermore, this article demonstrates that ageing reduces the positive influence of the environmental policy when growth is driven by human capital accumulation à la Lucas (1988) and lifetime is finite. It also confirms for finite lifetime the result found by Vellinga (1999) with a single representative agent: environmental care does not influence optimal growth when utility is additive and pollution does not influence the ability of agents to be educated.
    Date: 2009
  6. By: Navon, Guy
    Abstract: The paper studies the relationship between human capital spillovers and productivity using a unique longitudinal matched employer–employee dataset of Israeli manufacturing plants that contains individual records on all plant employees. I focus on the within-plant diversity of employees’ higher-education diplomas (university degrees). The variance decomposition shows that most knowledge diversity takes place within the industries. Using a semi-parametric approach, the study finds that hiring workers who are diversified in their specific knowledge is beneficial for plants’ productivity—the knowledge-diversity elasticity is about 0.2–0.25 and is robust—and that the benefit of knowledge diversity increase with the size of the plant. This suggests that for each allocation of labor in the production process it is beneficial for plants to diversify their skilled labor. The findings also suggest that the conventional way of estimating plant-level production function using Ordinary Least Squares or Fixed-Effects method is biased upward due to simultaneity of the inputs and the unobserved productivity shock.
    Keywords: human capital; spillovers; within; firm; plant; guy; navon; pakes; levinsohn; petrin; poi; olley
    JEL: J41 E24 J31 J24 D24 J82
    Date: 2009–06
  7. By: Hui He (Department of Economics, University of Hawaii at Manoa)
    Abstract: This paper quantitatively examines the effects of two exogenous driving forces, investment-specific technological change (ISTC) and the demographic change known as “the baby boom and the baby bust,” on the evolution of the skill premium in the postwar U.S. economy. I develop an overlapping generations general equilibrium model with endogenous discrete schooling choice. The production technology features capital-skill complementarity as in Krusell et al. (2000). ISTC, through capital-skill complementarity, raises the relative demand for skilled labor, while demographic variation affects the skill premium through changing the age structure and hence relative supply of skilled labor. I find that demographic change is more important in shaping the skill premium before 1980. Since then, ISTC takes over to drive the dramatic increase in the skill premium.
    Keywords: Skill Premium; Schooling Choice; Demographic and Technological Change; Capital-Skill Complementarity; Overlapping Generations
    JEL: E25 I21 J11 J24 J31 O33
    Date: 2009–03–01
  8. By: Jing Chen (Department of Economics, Florida International University)
    Abstract: This paper develops and tests a model that explains entry into serial entrepreneurship and the performance of serial entrepreneurs as the result of selection on innate ability. The model supposes that agents establish businesses with imperfect information about their entrepreneurial ability and the profitability of business ideas. Agents continually observe signals with which they update their beliefs, and this process eventually determines their next business choice. Selection on ability induces a positive correlation between entrepreneurial experience (measured by previous business earnings and founding experience) and serial business formation, as well as its subsequent performance. The predictions in the model are tested using panel data from the NLSY79. The analysis permits a distinction to be made between selection on innate ability and learning by doing.
    Keywords: Serial entrepreneurs, selection, ability, entrepreneurial experience, learning by doing.
    JEL: J21 J24 J62 M13
    Date: 2009–09

This nep-hrm issue is ©2009 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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