nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒10‒31
eleven papers chosen by
Fabio Sabatini
University of Siena

  1. Human capital and structural change: how do they interact with each other in growth? By Dalila NICET – CHENAF (GREThA UMR CNRS 5113); Eric ROUGIER (GREThA UMR CNRS 5113)
  2. Specific Human Capital as a Source of Superior Team Performance By Egon Franck; Stephan Nüesch; Jan Pieper
  3. Migration of the Highly Skilled: Can Europe catch up with the US? By Lydia Mechtenberg; Roland Strausz
  4. Sector-specific human capital and the distribution of earnings By Eric Smith
  5. Brain Drain and Brain Return: Theory and Application to Eastern-Western Europe By Karin Mayr; Giovanni Peri
  6. The Impact of Parental Education on Earnings: New Wine in an Old Bottle? By Hudson, John; Sessions, John
  7. Labor-market exposure as a determinant of attitudes toward immigration By Francesc Ortega; Javier G. Polavieja
  8. Bohemians, human capital and regional economic growth By Oliver Falck; Michael Fritsch; Stephan Heblich
  9. Respect, responsibility, and production By Breuer, Janice; McDermott, John
  10. What affects lifelong learning of scientists and engineers? By Grip Andries de; Smits Wendy
  11. Education and Entrepreneurial Choice: An Instrumental Variables Analysis By Jörn H. Block; Lennart Hoogerheide; Roy Thurik

  1. By: Dalila NICET – CHENAF (GREThA UMR CNRS 5113); Eric ROUGIER (GREThA UMR CNRS 5113)
    Abstract: Human capital measures (schooling) are poorly significant in explaining growth for developing countries. An explanation is that increases in human capital have no significant effect on growth if this human capital is misallocated and underemployed. In a simple two-sector model of a small open economy, we show that the effect of education on growth is more significant if the country has entered into the structural change that raises the demand for skilled labour. Moreover, we give a special attention to the role of entrepreneurs in the increase in the demand for skills in the modern sector and propose to measure it through the diversification of exports. We then derive an econometric specification from a simple two-sector model of growth with structural change and different levels of skills. From a sample of emerging economies, we provide econometric evidence that the reduction in the traditional share of GDP and a higher diversification of export both have a positive influence on growth rates. We also show that if the drop in traditional activities is to matter for growth, it is not through the skill reallocation from traditional to modern activities whereas export diversification is a factor of higher growth, directly but also through the enhancement of the effect of human capital on the increase of GDP. Then, the point could be that if reallocation of skills is to matter, it is more probably through shifts among the industrial sector, from the older to the newer activities than across sectors, from the traditional to the modern.
    Keywords: Human capital, growth, structural change
    JEL: C23 O14 O15
    Date: 2009
  2. By: Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Stephan Nüesch (Institute for Strategy and Business Economics, University of Zurich); Jan Pieper (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: In this paper, we empirically investigate the performance effect of team-specific human capital in highly interactive teams. Based on the tenets of the resource-based view of the firm and on the ideas of typical learning functions, we hypothesize that team members’ shared experience in working together positively impacts team performance, but at diminishing rates. Holding a team’s stock of general human capital and other potential drivers constant, we find support for this prediction. Implications concerning investment decisions into human capital as well as the transferability of our findings to other contexts are discussed.
    Date: 2009
  3. By: Lydia Mechtenberg; Roland Strausz
    Abstract: We develop a model to analyze the determinants and effects of an endogenous imperfect transferability of human capital on natives and immigrants. The model reveals that high migration flows and high skill-transferability are mutually interdependent. Moreover, we show that high mobility within a Federation is necessary to attract highly skilled immigrants into the Federation. We study in how far and in what way the European public policy behind the Bologna and the Lisbon Process can contribute to higher mobility in Europe.
    Keywords: human capital, migration, transferability, public policy
    JEL: D61 H77 I28
    Date: 2009–10
  4. By: Eric Smith
    Abstract: This paper incorporates assignment frictions and sector-specific training into the Roy model of occupational choice. Assignment frictions represent the extent of the market whereas differences in sector-specific training reflect worker specialization. This framework thus captures Adam Smith's idea that the extent of the market determines the division of labor. The paper demonstrates the way in which the relationship between assignment frictions and specialization affects the level and composition of human capital acquisition, aggregate output, and the distribution of income. Not surprisingly, economywide training, output, and specialization increase as the extent of the market increases. The distribution of these gains, however, is uneven. Within group or residual income, distribution does not converge monotonically as search frictions diminish. Comparisons across groups reveal that these effects can become more pronounced as average income increases.
    Date: 2009
  5. By: Karin Mayr; Giovanni Peri (Department of Economics, University of California, Davis, USA)
    Abstract: Recent empirical evidence seems to show that temporary migration is a widespread phenomenon, espe- cially among highly skilled workers who return to their countries of origin when these begin to grow. This paper develops a simple, tractable overlapping generations model that provides a rationale for return migra- tion and predicts who will migrate and who returns among agents with heterogeneous abilities. The model also incorporates the interaction between the migration decision and schooling: the possibility of migrating, albeit temporarily, to a country with high returns to skills produces positive schooling incentive effects. We use parameter values from the literature and data on return migration to simulate the model for the Eastern-Western European case. We then quantify the effects that increased openness (to migrants) would have on human capital and wages in Eastern Europe. We find that, for plausible values of the parameters, the possibility of return migration combined with the education incentive channel reverses the brain drain into a significant brain gain for Eastern Europe.
    Keywords: Skilled Migration, Return Migration, Returns to Education, Eastern-Western Europe
    JEL: F22 J61 O15
    Date: 2009–10
  6. By: Hudson, John; Sessions, John
    Abstract: We examine the impact of parental education on the shape of an individual’s experience-earnings profile. A number of factors suggest that parental education will affect the ability of an individual to translate labor market experience into earnings. Our empirical analysis of US data suggests that this is indeed the case. Higher parental education shifts the earnings profile significantly to the left – the profile of individuals with parents who both have 15 years of education peaks at 16 years of experience when their wages are 52% (24%) greater than those whose parents both have only 5 (10) years of education.
    Keywords: Parental education; human capital; earnings
    Date: 2009–05
  7. By: Francesc Ortega (Universitat Pompeu Fabra); Javier G. Polavieja (IMDEA Ciencias Sociales)
    Abstract: This paper re-examines the role of labor-market competition as a determinant of attitudes toward immigration. We claim two main contributions. First, we use more sophisticated measures of the degree of exposure to competition from immigrants than previously done. Specifically, we focus on the protection derived from investments in job-specific human capital and from specialization in communication-intensive jobs, in addition to formal education. Second, we explicitly account for the potential endogeneity arising from job search. Methodologically, we estimate, by instrumental variables, an econometric model that allows for heterogeneity at the individual, regional, and country level. Drawing on the 2004 European Social Survey, we obtain three main results. First, our estimates show that individuals that are currently employed in less exposed jobs are relatively more pro-immigration. This is true for both our new measures of exposure. Second, we show that the protection granted by job-specific human capital is clearly distinct from the protection granted by formal education. Yet the positive effect of education on pro-immigration attitudes is greatly reduced when we control for the degree of communication intensity of respondents\' occupations. Third, OLS estimates are biased in a direction that suggests that natives respond to immigration by switching to less exposed jobs. The latter finding provides indirect support for the endogenous job specialization hypothesis postulated by Peri and Sparber (2009).
    Keywords: immigration attitudes; labor market; job-specific human capital; communication skills; international migration
    JEL: F1 F22 J61 J31 R13
    Date: 2009–10–21
  8. By: Oliver Falck (Ifo Institute for Economic Research); Michael Fritsch (University of Jena); Stephan Heblich (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy)
    Abstract: An emerging literature on the geography of bohemians argues that a region’s lifestyle and cultural amenities explain, at least partly, the unequal distribution of highly qualified people across space, which in turn, explains geographic disparities in economic growth. However, to date, there has been little or no empirical attempt to identify a causal relation. To identify the causal impact of bohemians on economic growth, we apply an instrumental variable approach using as an exogenous instrument the geographic distribution of bohemians prior to the Industrial Revolution in Germany. This distribution was primary the result of competition for prestige between courts and not of economic prosperity. Accordingly, the instrument is independent of today’s regional economic development. Focusing on the concentration of highly skilled people today that is explained by the proximity to exogenous concentrations of bohemians, the observed local average treatment effect supports the hypothesis of a positive impact of bohemians on regional economic development.
    Keywords: Regional Growth, Human Capital, Bohemians, Instrumental Variables
    JEL: R11 J24 C31
    Date: 2009
  9. By: Breuer, Janice; McDermott, John
    Abstract: We examine the impact of the values respect for others and responsibility on productivity and the accumulation of physical and human capital for a sample of 58 countries. We find that these two core values are important and that their impact is substantial. Respect for others works primarily through productivity whereas responsibility is important to investment in physical and human capital. We also show that respect and responsibility are embedded in institutions and may overcome the negative macroeconomic effects associated with fractionalized societies.
    Keywords: values; respect for others; responsibility; institutions; productivity; human capital; output per worker
    JEL: O1 Z1 O43 O10
    Date: 2009–10
  10. By: Grip Andries de; Smits Wendy (METEOR)
    Abstract: This paper greatly enriches the discussion on the determinants of lifelong learning of scientists and engineers (S&Es). In our analysis, which is based on a survey among S&Es in the Netherlands, we take account of both formal training and different modes of informal learning. We find that S&Es employed in firms which apply innovative production processes more often participate in formal training and also benefit from the informal learning potential of their jobs. Therefore, public policies that stimulate process innovation also prevent skills obsolescence among S&Es. However, lifelong learning is not triggered in firms with many product innovations. S&Es who are employed in firms which operate on highly competitive markets also participate in formal training less often. The same holds for S&Es employed in small firms, although the latter compensate their lower participation in formal training by more hours of self-teaching. S&Es employed in jobs which require a high level of technical knowledge have more formal training, whereas those employed in jobs which require more general skills are significantly more involved in informal learning. Furthermore, older S&Es with long firm tenures participate in formal training less often and have fewer opportunities for learning in their jobs. Therefore, their competence level is at risk.
    Keywords: labour economics ;
    Date: 2009
  11. By: Jörn H. Block (Erasmus University Rotterdam, Technische Universität München); Lennart Hoogerheide (Erasmus University Rotterdam); Roy Thurik (Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena)
    Abstract: Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study is the first to account for this endogeneity by using an instrumental variables approach. The effect of education on the decision to become self-employed is found to be strongly positive, much higher than the estimated effect in case no instrumental variables are used. That is, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed.
    Keywords: Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables; entrepreneurship
    JEL: C35 I20 J24 L26
    Date: 2009–10–13

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