nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒01‒10
twelve papers chosen by
Fabio Sabatini
University of Siena

  1. Migration and human capital in an endogenous fertility model By Luca Marchiori; Patrice Pieretti; Benteng Zou
  2. Estimating Human Capital Externalities:The Case of Spanish Regions By Manuel Hidalgo Pérez; Walter García-Fontes
  3. Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees By van Praag, Mirjam; van Witteloostuijn, Arjen; van der Sluis, Justin
  4. Efficient Subsidization of Human Capital Accumulation with Overlapping Generations and Endogenous Growth By Richter, Wolfram F.; Braun, Christoph
  5. Taxation of human capital and wage inequality: a cross-country analysis By Fatih Guvenen; Burhanettin Kuruscu; Serdar Ozkan
  6. Public versus Private Education with Risky Human Capital By Fabian Kindermann
  7. High Skilled Migration from India An Analysis of its Economic Implications By Sunil Mani
  8. "Human Capital Formation in Mitsubishi Zaibatsu in Prewar Japan: Analysis of Personal History Data" (in Japanese) By Tetsuji Okazaki
  9. The Impact of Parental Education on Earnings: New Wine in an Old Bottle? By Hudson, John; Sessions, John
  10. Parental Job Loss, Income Shocks and the Education Enrolment of Youth By Michael B Coelli
  11. Cultural Diversity and Local Labour Markets By Suedekum, Jens; Wolf, Katja; Blien, Uwe
  12. Personality and Career - She's Got What It Takes By Simon Fietze; Elke Holst; Verena Tobsch

  1. By: Luca Marchiori; Patrice Pieretti; Benteng Zou (CREA, University of Luxembourg)
    Abstract: What is the impact of high-skilled emigration on fertility and human capital in migrants’ origin countries? This question is analyzed within an overlapping generations model where parents choose to finance higher education to a certain number of their children. It follows that families are composed of high- and low-skilled children who may both emigrate with a certain probability when they reach adulthood. It is found that a brain drain leads to a change in children’s skill composition, with parents choosing to provide higher education to a larger number of their children. A calibration of the model suggests that, following a brain drain, the additional children benefiting from higher education might in the long run compensate for the loss of high-educated workers and lead to a brain gain.
    JEL: F22 J13 J24
    Date: 2009
  2. By: Manuel Hidalgo Pérez (Department of Economics, Universidad Pablo de Olavide); Walter García-Fontes (Universidad Pompeu Fabra y CREA)
    Abstract: We estimate the strength of schooling externalities for Spanish regions over the 1981-2001 period. Our empirical work employs both main approaches available in the literature. Both methodologies yield significant externalities. Using a growth accounting exercise, we find that human capital externalities account for one half of the increase in real wages for the period between 1981 and 2001.
    Keywords: externalities, human capital, constant composition.
    JEL: I21 J31 O47
    Date: 2009–12
  3. By: van Praag, Mirjam (University of Amsterdam); van Witteloostuijn, Arjen (University of Antwerp); van der Sluis, Justin (University of Amsterdam)
    Abstract: How valuable is education for entrepreneurs' performance as compared to employees'? What might explain any differences? And does education affect peoples' occupational choices accordingly? We answer these questions based on a large panel of US labor force participants. We show that education affects peoples' decisions to become an entrepreneur negatively. We show furthermore that entrepreneurs have higher returns to education than employees (in terms of the comparable performance measure 'income'). This is the case even when estimating individual fixed effects of the differential returns to education for spells in entrepreneurship versus wage employment, thereby accounting for selectivity into entrepreneurial positions based on fixed individual characteristics. We find these results irrespective of whether we control for general ability and/or whether we use instrumental variables to cope with the endogenous nature of education in income equations. Finally, we find (indirect) support for the argument that the higher returns to education for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education. Entrepreneurs have more personal control over the profitable employment of their human capital than wage employees.
    Keywords: entrepreneurship, self-employment, returns to education, performance, personal control, locus of control, human capital, wages, incomes
    JEL: J23 J24 J31 J44 M13
    Date: 2009–12
  4. By: Richter, Wolfram F. (University of Dortmund); Braun, Christoph (Ruhr Graduate School in Economics)
    Abstract: This paper studies second-best policies in an OLG model in which endogenous growth results from human capital accumulation. When young, individuals decide on education, saving, and nonqualified labour. When old, individuals supply qualified labour. Growth equilibria are inefficient in laissez-faire because of distortionary taxation. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents' productivity. It is shown to be second best not to distort education if the human capital investment function is isoelastic. If the function is not isoelastic, a case is made for subsidizing education even relative to the first best.
    Keywords: OLG model, endogenous growth, endogenous labour, education and saving, intergenerational externalities, optimal taxation
    JEL: H21 I28 J24
    Date: 2009–12
  5. By: Fatih Guvenen; Burhanettin Kuruscu; Serdar Ozkan
    Abstract: Wage inequality has been significantly higher in the United States than in continental European countries (CEU) since the 1970s. Moreover, this inequality gap has further widened during this period as the US has experienced a large increase in wage inequality, whereas the CEU has seen only modest changes. This paper studies the role of labor income tax policies for understanding these facts. We begin by documenting two new empirical facts that link these inequality differences to tax policies. First, we show that countries with more progressive labor income tax schedules have significantly lower before-tax wage inequality at different points in time. Second, progressivity is also negatively correlated with the rise in wage inequality during this period. We then construct a life cycle model in which individuals decide each period whether to go to school, work, or be unemployed. Individuals can accumulate skills either in school or while working. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. We find that these policies can account for half of the difference between the US and the CEU in overall wage inequality and 76% of the difference in inequality at the upper end (log 90-50 differential). When this economy experiences skill-biased technological change, progressivity also dampens the rise in wage dispersion over time. The model explains 41% of the difference in the total rise in inequality and 58% of the difference at the upper end.
    Keywords: Wages ; Human capital ; Taxation
    Date: 2009
  6. By: Fabian Kindermann
    Abstract: This paper studies the long-run macroeconomic, distributional and welfare effects of tuition policy and student loans. We therefore form a rich model of risky human capital investment based on the seminal work of Heckman, Lochner and Taber (1998). We extend their original model by variable labor supply, borrowing constraints, idiosyncratic wage risk, uncertain life-span, and multiple schooling decisions. This allows us to build a direct link between students and their parents and make the initial distribution of people over different socio-economic backgrounds endogenous. Our simulation indicate that privatization of tertiary education comes with a vast reduction in the number of students, an increase in the college wage premium and longrun welfare losses of around 5 percent. Surprisingly, we find that from privatization of tertiary education, students are better off compared to workers from other educational classes, since the college wage premium nearly doubles. In addition, our model predicts that income contingent loans on which students don’t have to pay interest, improve the college enrolment situation for agents from all kinds of backgrounds.
    Keywords: public vs. private education, schooling choice, human capital investment, idiosyncratic uncertainty
    JEL: I22 J24 H52
    Date: 2009
  7. By: Sunil Mani
    Abstract: The purpose of the paper is first to quantify the extent of high skilled migration from India and then to distil out two of its economic implications to her home economy. [WP 416].
    Keywords: India, high skilled, brain drain, brain circulation, remittances, science and engineering work force, migration, skilled,
    Date: 2009
  8. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper analyses the effects of schooling, outside work experience and job tenure on human capital formation, using the personal history data of white collar employees of Mitsubishi Zaibatsu in prewar Japan. For all samples including both engineers and clerks, the rate of return to schooling was 4.19%, which was higher than those to outside work experience and tenure. In case we allow for difference in the effects of schooling, outside work experience and job tenure between engineers and clerks, the rate of return to schooling was 5.11% for engineers, while it was 2.61% for clerks. It is notable that for clerks the rate of return to schooling was lower than that to job tenure. These results imply that Mitsubishi differentiated the systems of human capital formation between engineers and clerks. That is, while schooling was the central measure for human capital formation for engineers, on-the-job-training inside the firm was that for clerks.
    Date: 2009–12
  9. 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
  10. By: Michael B Coelli
    Abstract: Parental job loss from layoffs and business failures that occur when youth complete high school completion are found to be negatively correlated with enrolment at university and community college. Estimates from a year-to-year education transition model using longitudinal data on youth and their parents are employed to identify both immediate and lagged effects of parental job loss on education transitions. It is argued that these results can be interpreted as evidence of a potential causal effect of parental income on youth education attainment, as job losses are likely to have persistent and exogenous negative effects on parental income.
    Keywords: Education; human capital; job loss; income shocks; causal effect
    JEL: I29 J63 I39
    Date: 2009
  11. By: Suedekum, Jens (University of Duisburg-Essen); Wolf, Katja (IAB, Nürnberg); Blien, Uwe (IAB, Nürnberg)
    Abstract: During the last decade there have been marked changes in the composition of the non-native workforce in the German labour market. In particular there has been a notable increase in the diversity of nationalities of which the foreign workforce is composed. In this paper we investigate the effects of this diversity for native employees. Our analysis is conducted at the local level and uses a panel of 326 Western German regions over the time period 1995-2006. When considering high-skilled foreign workers, we find that both the size of this group and the diversification into different nationalities raise local wages and employment for native employees. For low-skilled foreign workers we find negative size effects. However, these negative effects can be partly offset if the group of low-skilled foreigners is culturally diversified. Our results imply that diversity raises productivity at the local level, but that it is important to distinguish the skill composition of the foreign workforce. These findings remain robust in a variety of robustness checks that take into account omitted variable bias, self-selection of foreigners into particular regions, and spatial autocorrelation.
    Keywords: regional labour markets, cultural diversity, immigration, spatial equilibrium
    JEL: R23 J21 J31
    Date: 2009–12
  12. By: Simon Fietze; Elke Holst; Verena Tobsch
    Abstract: The female share in management positions is quite low in Germany. The higher the hierarchical level, the fewer women there are in such positions. Men have numerous role models to follow whereas women lack this opportunity: In the executive boards of the top 200 private companies in Germany, only 2.5 percent of members are female. Many studies have focused on the influence of human capital and other "objective" factors on career opportunities. In our study, we go a step further by also looking at the impact of self-reported personality traits on gender differences in career chances. We compare managers and other white-collar employees in Germany's private sector. While bivariate results based on data from the German Socio-Economic Panel (SOEP) in 2005 show that there are significant gender differences in personality traits, multivariate estimations clearly indicate that these differences cannot account for gender differences in career opportunities. Nevertheless, personality traits might indeed play a role, albeit more indirectly: Some of the stronger career effects, such as work experience, long working hours, and labour market segregation, can also reflect differences in personality traits. These might have been influenced at an early stage by a gender-biased environment. Our results strongly stress the need for a gender-neutral environment outside and inside companies in order to enforce equal career opportunities for women and men.
    Keywords: personality, gender, career, leadership
    JEL: J16 M12
    Date: 2009

This nep-hrm issue is ©2010 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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