nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2009‒11‒07
eleven papers chosen by
Fabio Sabatini
University of Siena

  1. Clusters of Entrepreneurship By Edward Glaeser; William Kerr; Giacomo Ponzetto
  2. Education, Rent Seeking and Growth By Berdugo, Binyamin; Meir, Uri
  3. The Causal Effect of Education on Wages Revisited By Matt Dickson
  4. Targeting Non-Cognitive Skills to Improve Cognitive Outcomes: Evidence from a Remedial Education Intervention By Holmlund, Helena; Silva, Olmo
  5. Skill Formation, Capital Adjustment Cost and Wage Inequality By Yabuuchi, Shigemi; Chaudhuri, Sarbajit
  6. The Impact of Aggregate and Sectoral Fluctuations on Training Decisions By Caponi, Vincenzo; Kayahan, Cevat Burc; Plesca, Miana
  7. The Officina Emilia Initiative:Innovative Local Actions to Support Education and Training Systems By Margherita Russo; Paola Mengoli
  8. Sorting, Peers and Achievement of Aboriginal Students in British Columbia By Friesen, Jane; Krauth, Brian
  9. Persistence in the determination of work-related training participation: evidence from the BHPS, 1991-1997. By Panos Sousounis; Robin Bladen-Hovell
  10. Skill Shortage versus Subject Choice, Case of Pakistan By Atiq, Atiq-ur-Rehman; Anis, Hafsa; Khan, Saud Ahmed
  11. Does Education Shield Against Common Mental Disorders? By Edvard Johansson; Petri Böckerman; Tuija Martelin; Sami Pirkola; Karí Poikolainen

  1. By: Edward Glaeser; William Kerr; Giacomo Ponzetto
    Abstract: Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale. Our evidence suggests that entrepreneurship is higher when fixed costs are lower and when there are more entrepreneurial people.
    Keywords: Entrepreneurship, Industrial Organization, Chinitz, Agglomeration, Clusters, Cities
    JEL: J2 L0 L1 L2 L6 O3 R2
    Date: 2009–10
  2. By: Berdugo, Binyamin; Meir, Uri
    Abstract: This paper studies the role of education as a way of reducing private rent seeking activities and increasing output. In many underdeveloped economies, for most individuals, there is no private return to education. Nonetheless, according to this paper, governments are better off by investing in public education. We view education as a means to build personal character, thereby affecting macroeconomic long run equilibrium by reducing the number of individuals who are engaged in private rentseeking activities. We show that education is more efficient than ordinary law enforcement because it has a long-run effect. The policy implication of this result is that even when education does not increase human capital, compulsory schooling will be beneficial in pulling underdeveloped economies out of poverty.
    Keywords: Rent Seeking; Decency; Education; Growth
    JEL: O10 A20 O43 I21
    Date: 2009–10–31
  3. By: Matt Dickson
    Abstract: This paper estimates the return to education using two alternative instrumental variable estimators: one exploits variation in schooling associated with early smoking behaviour, the other uses the raising of the minimum school leaving age. Each instrument estimates a ‘local average treatment effect’ and my motivation is to analyse the extent to which these differ and which is more appropriate for drawing conclusions about the return to education in Britain. I implement each instrument on the same data from the British Household Panel Survey, and use the over-identification to test the validity of my instruments. I find that the instrument constructed using early smoking behaviour is valid as well as being strong, and argue that it provides a better estimate of the average effect of additional education, akin to ordinary least squares but corrected for endogeneity. I also exploit the dual sources of exogenous variation in schooling to derive a further IV estimate of the return to schooling. I find the OLS estimate to be considerably downward biased (around 4.6%) compared with the IV estimates of 12.9% (early smoking), 10.2% (RoSLA) and 12.5% (both instruments).
    Keywords: human capital, endogeneity, local average treatment effect
    JEL: I20 J30
    Date: 2009–09
  4. By: Holmlund, Helena (CEP, London School of Economics); Silva, Olmo (London School of Economics)
    Abstract: A growing body of research highlights the importance of non-cognitive skills as determinants of young people's cognitive outcomes at school. However, little evidence exists about the effects of policies that specifically target students' non-cognitive skills as a way to improve educational achievements. In this paper, we shed light on this issue by studying a remedial education programme aimed at English secondary school pupils at risk of school exclusion and with worsening educational trajectories. The main peculiarity of this intervention is that it solely targets students' non-cognitive skills – such as self-confidence, locus of control, self-esteem and motivation – with the aim of improving pupils' records of attendance and end-of-compulsory-education (age 16) cognitive outcomes. We evaluate the effect of the policy on test scores in standardized national exams at age-16 using both least squares and propensity-score matching methods. Additionally, we exploit repeated observations on pupils’ test scores to control for unobservables that might affect students’ outcomes and selection into the programme. We find little evidence that the programme significantly helped treated youths to improve their age-16 test outcomes. We also find little evidence of heterogeneous policy effects along a variety of dimensions.
    Keywords: cognitive and non-cognitive skills; policy evaluation; secondary schooling
    JEL: C20 I20 H75
    Date: 2009–10
  5. By: Yabuuchi, Shigemi; Chaudhuri, Sarbajit
    Abstract: The paper employs a three-sector general equilibrium model for examining the consequences of an infrastructure development scheme to the education sector and an inflow of foreign capital on the skilled-unskilled wage inequality in a developing economy. The education sector faces a capital adjustment cost for which the effective unit cost of capital depends positively on the amount of capital employed. Although both infrastructure development scheme and inflows of foreign capital lead to higher skill formation, the policies produce incongruent effects on the wages of skilled and unskilled labour. Furthermore, the effects of the policies on the skilled-unskilled wage inequality depend crucially on the relative factor intensities of the low-skill and high-skill sectors. Finally, which of the two policies should the country adopt depends on the technological, institutional and trade related factors.
    Keywords: Skill formation; skilled labour; unskilled labour; wage inequality; foreign capital; capital adjustment cost
    JEL: F16 F13 J31
    Date: 2009–03–30
  6. By: Caponi, Vincenzo; Kayahan, Cevat Burc; Plesca, Miana
    Abstract: The literature has not yet resolved whether the effect of macroeconomic fluctuations on training decisions is positive or negative. On the one hand, the opportunity cost to train is lower during downturns, and thus training should be counter-cyclical. On the other hand, a positive shock may be related to the adoption of new technologies and increased returns to skill, making training incidence pro-cyclical. Using the Canadian panel of Workplace and Employee Survey (WES), we document another important channel at work: the relative position of a sector also matters. We find not only that training moves counter-cyclically with the aggregate business cycle (more training during downturns), but also that the idiosyncratic sectoral shocks have a positive impact on training incidence (more training in sectors doing relatively better). These findings help us better understand training decisions by firms.
    Keywords: Training; Human capital; Business cycles; Sectoral shocks
    JEL: J24 E32
    Date: 2009–10–25
  7. By: Margherita Russo; Paola Mengoli
    Abstract: The issue of the regeneration of skills, in particular in the light engineering industry, is addressed by Officina Emilia (henceforth OE) as a crucial one in order to re-examine the interweaving of education, innovation and local development in the SMEs production systems. The project, aimed at the education and training systems, is designed to enhance the industrial culture in order to strengthen technical and scientific education. First sponsored in 2000 by the University of Modena & Reggio Emilia (Italy), over the last years OE has gathered the support of local actors dealing with the themes of training, culture, and local development. In 2009 it opened its museolaboratorio (“workshop-museum”) in which teaching activities promote an interest in the themes of work, technologies and the socio-economic development of the territory among the students and teachers of schools of all types and levels. The involvement of class groups, of teachers and other visitors takes place through active learning practices that foster motivation and develop a sense of belonging which is likely to lead to a more profitable educational experience, both secondary and tertiary, as well as to contribute to improving career prospects. Officina Emilia proposes innovative action on a local level, allowing for the implementation of effective teaching practices as well as the broadening and consolidation of best practices which might support a society-wide trend towards maintaining a high demand for a better quality of education and the ability to provide it. Ten years after the beginning of the initiative, with this paper we intend to open up the discussion on the various research issues and on the actions undertaken, focusing on the analytical tools and the main critical areas in the further implementation of the Officina Emilia initiative.
    Keywords: Analysis of Education; Education Policy; Regional Development Policies; Innovation
    JEL: I21 J24 I28 O31 R58
    Date: 2009–05
  8. By: Friesen, Jane; Krauth, Brian
    Abstract: We use administrative data on students in grades 4 and 7 in British Columbia to examine the extent to which differences in school environment contribute to the achievement gap between Aboriginal and non-Aboriginal students as measured by standardized test scores. We find that segregation of Aboriginal and non-Aboriginal students is substantial, and that differences in the distribution of these two groups across schools account for roughly half the overall achievement gap on the Foundation Skills Assessment tests in grade 7. The substantial school-level segregation of Aboriginal and non-Aboriginal student across schools means that Aboriginal students on average have a higher proportion of peers who are themselves Aboriginal, as well as a higher proportion of peers in special education. We estimate the effect of peer composition on value-added exam outcomes, using longitudinal data on multiple cohorts of students together with school-by-grade fixed effects to account for endogenous selection into schools. We find that having a greater proportion of Aboriginal peers, if anything, improves the achievement of Aboriginal students.
    Keywords: Aboriginal education, peer effects
    JEL: I21
    Date: 2009–10–24
  9. By: Panos Sousounis (Department of Economics, University of the West of England); Robin Bladen-Hovell (Keele University)
    Abstract: In this paper we investigate the role of workers‘ training history in determining current training incidence. The analysis is conducted on an unbalanced sample comprising information on approximately 5000 employees from the first seven waves of the BHPS. Training participation is modelled as a dynamic random effects probit model where the effects of unobserved heterogeneity and initial conditions are accounted for in a fashion consistent with methods proposed by Chamberlain (1984) and Wooldridge (2002) respectively. The results suggest that prior training experience is a significant determinant of a worker‘s participation in a current training episode comparable with other formal educational qualifications.
    Keywords: Training; state dependence; dynamic probit
    JEL: J24 C23
    Date: 2009–10
  10. By: Atiq, Atiq-ur-Rehman; Anis, Hafsa; Khan, Saud Ahmed
    Abstract: Higher Education is believed to be a very important determinant of economic growth. The growth can be optimized with a suitable combination of skills in various subjects. A mismatch between required combination of skills and available combination of skills carries heavy costs for developing economies since import of skill from foreign is much more in expensive for such economies. We compare skill shortage in Pakistan with the subjects choice of students recently enrolled in institutes of higher learning. We found that there is a mismatch between skill shortage and the enrollment trend. We propose that the Government should regulate recruitment of students into various subjects in order to create greater harmony between national needs and students enrollment.
    Keywords: Subject Choice; Skill Shortage; National Needs
    JEL: J08 J82
    Date: 2009
  11. By: Edvard Johansson; Petri Böckerman; Tuija Martelin; Sami Pirkola; Karí Poikolainen
    Abstract: ABSTRACT : The paper examines the causal effect of education on common individual mental disorders in adulthood. We use a representative population health survey and instrumental variable methods. The estimates point to mostly insignificant effects of education on common mental disorders. We find that the length of education reduces the BDI (Beck Depression Inventory) measure at the 10% significance level, but has no effect when using the GHQ-12 (12-item General Health Questionnaire) or the probability of severe depression as a measure of mental health. These results cast doubt on the view that the length of formal education would be a particularly important determinant of common mental disorders later in life.
    JEL: I12 I21
    Date: 2009–10–20

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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