nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒02‒13
nine papers chosen by
Fabio Sabatini
University of Siena

  1. Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany By Basilio, Leilanie; Bauer, Thomas
  2. The Evolution of the Returns to Human Capital in Canada, 1980-2005 By Boudarbat, Brahim; Lemieux, Thomas; Riddell, W. Craig
  3. College Achievement and Earnings By Gemus, Jonathan
  4. Estimating the Technology of Cognitive and Noncognitive Skill Formation By Cunha, Flavio; Heckman, James J.; Schennach, Susanne
  5. Subsidized Vocational Training: Stepping Stone or Trap? An Evaluation Study for East Germany By Eva Dettmann; Jutta Günther
  6. Earning While Learning: Labor Market Returns to Student Employment During Tertiary Education By Regula Geel; Uschi Backes-Gellner
  7. The Black Economy and Education By Kolml, Ann-Sofie; Larsen, Birthe
  8. Economic Adversity and Entrepreneurship-led Growth: Lessons from the Indian Software Sector By Athreye, Suma
  9. Work Out or Out of Work: The Labor Market Return to Physical Fitness and Leisure Sport Activities By Rooth, Dan-Olof

  1. By: Basilio, Leilanie (Ruhr Graduate School in Economics); Bauer, Thomas (RWI Essen)
    Abstract: This paper investigates the transferability of human capital across countries and the contribution of imperfect human capital portability to the explanation of the immigrant-native wage gap. Using data for West Germany, our results reveal that, overall, education and labor market experience accumulated in the home countries of the immigrants receive significantly lower returns than human capital obtained in Germany. We further find evidence for heterogeneity in the returns to human capital of immigrants across origin countries. Finally, imperfect human capital transferability appears to be a major factor in explaining the wage differential between natives and immigrants.
    Keywords: assimilation, immigration, rate of return, human capital
    JEL: J61 J31 J24
    Date: 2010–01
  2. By: Boudarbat, Brahim; Lemieux, Thomas; Riddell, W. Craig
    Abstract: We examine the evolution of the returns to human capital in Canada over the period 1980-2005. Our main finding is that returns to education increased substantially for Canadian men, contrary to conclusions reached previously. Most of this rise took place in the early 1980s and since 1995. Returns to education also rose, albeit more modestly, for Canadian women. Another important development is that after years of expansion, the wage gap between younger and older workers stabilized after 1995. Controlling for work experience and using Canadian Census data appear to account for the main differences between our results and earlier findings.
    Keywords: Human Capital, Wage Differentials, Canada
    JEL: J24 J31
    Date: 2010–01–30
  3. By: Gemus, Jonathan (Department of Economics)
    Abstract: I study the size and sources of the monetary return to college achievement as measured by cumulative Grade Point Average (GPA). I first present evidence that the return to achievement is large and statistically significant. I find, however, that this masks variation in the return across different groups of people. In particular, there is no relationship between GPA and earnings for graduate degree holders but a large and positive relationship for people without a graduate degree. To reconcile these results, I develop a model where students of differing and initially uncertain ability levels choose effort level in college and whether to earn a graduate degree. College achievement and graduate attainment are allowed to increase human capital and be used by employers to screen workers. In the separating equilibrium studied, workers who earn a graduate degree can effectively signal high productivity to employers. As a result, employers use undergraduate GPA-a noisy signal of productivity-to screen only the workers who do not hold a graduate degree. Viewing the empirical results through the lens of this equilibrium, the zero GPA-earnings relationship for graduate degree holders and the positive and large relationship for people without a graduate degree suggests that most of the reutrn to achievement net of graduate educational attainment is driven by sorting.
    Keywords: Returns to Education; Academic Achievement; Signaling; Human Capital
    JEL: D82 I20 I21 J24
    Date: 2010–01–27
  4. By: Cunha, Flavio (University of Pennsylvania); Heckman, James J. (University of Chicago); Schennach, Susanne (University of Chicago)
    Abstract: This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It increases slightly in later stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and for some outcomes, it is optimal to invest relatively more in the later stages of childhood than in earlier stages.
    Keywords: cognitive skills, noncognitive skills, dynamic factor analysis, endogeneity of inputs, anchoring test scores, parental influence
    JEL: C31 J13
    Date: 2010–01
  5. By: Eva Dettmann; Jutta Günther
    Abstract: The aim of this paper is to analyze whether the formally equal qualifications acquired during a subsidized vocational education induce equal employment opportunities compared to regular vocational training. Using replacement matching on the basis of a statistical distance function, we are able to control for selection effects resulting from different personal and profession-related characteristics, and thus, to identify an unbiased effect of the public support. Besides the ‘total effect’ of support, it is of special interest if the effect is stronger for subsidized youths in external training compared to persons in workplace-related training. The analysis is based on unique and very detailed data, the Youth Panel of the Halle Centre for Social Research (zsh). The results show that young people who successfully completed a subsidized vocational education are disadvantaged regarding their employment opportunities even when controlling for personal and profession-related influences on the employment prospects. Besides a quantitative effect, the analysis shows that the graduates of subsidized training work in slightly worse (underqualified) and worse paid jobs than the adolescents in the reference group. The comparison of both types of subsidized vocational training, however, does not confirm the expected stronger effect for youths in external vocational education compared to workplace-related training.
    Keywords: microeconometric evaluation, matching, vocational education, East Germany
    JEL: C14 I21 J24
    Date: 2010–01
  6. By: Regula Geel (Institute for Strategy and Business Economics, University of Zurich); Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: We examine how different student employment statuses during tertiary education affect short-term and medium-term labor market returns. We focus on differences between students studying full-time and students studying and working part-time, i.e., ‘earning while learning’. In addition, we distinguish between student employment with and without relation to the study. Using a representative survey of Swiss graduates of tertiary education, we find significant positive labor market returns of ’earning while learning‘, but only for related student employment and not for unrelated student employment. The returns come in the form of lower unemployment risk, shorter job search duration, higher wage effects and greater responsibility. Therefore, student employment with a relation to the study is a complement to formal education and augments skills and knowledge.
    Keywords: Student Employment, Part-time Studies, Tertiary Education
    JEL: I21 J31 J64
    Date: 2010–02
  7. By: Kolml, Ann-Sofie (Dept. of Economics, Stockholm University); Larsen, Birthe (Insead, CEBR and Copenhagen Business School)
    Abstract: This paper develops and equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that informal sector job opportunities distort educational attainment inducing a too low stock of educated workers. As informal job opportunities to a larger extent face low skilled workers, combating the informal sector improves welfare as it increases the incentives for education. However, too aggressive combating of the informal sector is not optimal as that induces inefficiently high unemployment rates.
    Keywords: Tax evasion; underground economy; education; matching; unemployment
    JEL: H26 I21 J64
    Date: 2010–02–02
  8. By: Athreye, Suma
    Abstract: It is commonly believed that the business environment in developing countries does not allow productive technology-based entrepreneurship to flourish. In this paper, we draw on the experience of Indian software firms where entrepreneurial growth has belied these predictions. This paper argues that the business models chosen by Indian firms were those that best aligned the country’s abundant labour resources and advantages to global demand. Many potentially higher value added opportunities struggled to attain success, but the qualitative value of experimental failures and the capability gaps they exposed was invaluable for collective managerial learning in the industry. Second, the paper also shows that the presence of growth opportunities and the success of firms stimulated institutional evolution to promote entrepreneurial growth. Last we show that the distinctive aggregate contribution of entrepreneurial firms was that they outperformed business houses and multinational subsidiaries in their more productive use of available capital resources whilst achieving similar levels of growth in output and employment. This paper draws upon an earlier shorter paper co-authored with Mike Hobday and titled 'Overcoming Development Adversity: How Entrepreneurs Led Software Development in India'.
    Keywords: Technology entrepreneurship, institutions and economic development, Indian software, intellectual property rights
    Date: 2010
  9. By: Rooth, Dan-Olof (Linneaus University)
    Abstract: This study is the first to present evidence of the return to leisure sports in the job hiring process by sending fictitious applications to real job openings in the Swedish labor market. In the field experiment job applicants were randomly given different information about their type and level of leisure sport being engaged in. Applications which signal sport skills have a significantly higher callback rate of about two percentage points for men, and this effect is about twice as large in physically demanding occupations. This indicates a health-productivity interpretation of the results. However, the result is mainly driven by the return to sports as soccer and golf, and not at all by more fitness related sports as running and swimming, which is indicative of alternative explanations for the labor market sports premium. One possible explanation emerges when analyzing register data on adult earnings and physical fitness when enlisting at age 18. The fitness premium, net of unobservable family variables, is in the order of 4-5 percent, but diminishes to 1 percent when controlling for non-cognitive skills. Hence, these results indicate that being engaged in leisure sports signals having important social skills.
    Keywords: leisure sports, physical fitness, cardiovascular fitness, correspondence testing, earnings
    JEL: J21 J64 J71
    Date: 2010–01

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