nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒03‒06
eight papers chosen by
Fabio Sabatini
University of Siena

  1. Policies to Create and Destroy Human Capital in Europe By James J. Heckman; Bas Jacobs
  2. The Use and Effect of Social Capital in New Venture Creation - Solo Entrepreneurs vs. New Venture Teams By Uwe Cantner; Michael Stützer
  3. SMEs and Regional Economic Growth in Brazil By Túlio A. Cravo; Adrian Gourlay; Bettina Becker
  4. Intellectual property rights, human capital and the incidence of R&D expenditures By Bravo-Ortega, Claudio; Lederman, Daniel
  5. Human Capital and Fertility in Germany after 1990: Evidence from a Multi-Spell Model By Marco Sunder
  6. Race and self-employment: The role of training programs, self-employment background, and access to financing By Michaelides, Marios
  7. Skill Formation in Bombay’s Slums By Krishnan, P.; Krutikova, S.
  8. On the Incidence of Employment Subsidies to Vocational Training By Karsten Albæk

  1. By: James J. Heckman; Bas Jacobs
    Abstract: Trends in skill bias and greater turbulence in modern labor markets put wages and employment prospects of unskilled workers under pressure. Weak incentives to utilize and maintain skills over the life-cycle become manifest with the ageing of the population. Policies to promote human capital formation reduce welfare state dependency among the unskilled and offset inefficiencies in human capital formation. Skill formation features strong dynamic complementarities over the life-cycle. Investments in the human capital of children have higher returns than investments in the human capital of older workers. There is no trade-off between equity and efficiency at early ages of human development but there is a substantial trade-off at later ages. Later remediation of skill deficits acquired in early years often does not meet the cost-benefit criterion. Positive returns to active labor market and training policies are doubtful. Skill formation is impaired when the returns to skill formation are low due to low skill use and insufficient skill maintenance later on in life. High marginal tax rates and generous benefit systems reduce labor force participation rates and hours worked and thereby lower the utilization rate of human capital. Tax-benefit systems redistribute resources from outsiders to insiders in labor markets, which can be both distortionary and inequitable. Actuarially fairer early retirement and pension schemes reduce the incentives to retire early and strengthen incentives for human capital investment by increasing the time-horizon over which returns to human capital are harvested.
    JEL: H2 H5 I2 I3 J2 J3
    Date: 2010–02
  2. By: Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Stützer (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: This paper examines the use of social capital in the venture creation process. We compare solo entrepreneurs (n=182) and new venture teams (n=274) from a random sample of start-ups in innovative industries and test social capital use and its effects on firm performance. Our results reveal that solo entrepreneurs and new venture teams do not differ in their degree of use of social capital. However, there are differences in the determinants of social capital use in both groups. We find that weak ties assist solo entrepreneurs and have positive significant effects on new venture performance. For team start- ups, we find no direct effect of social capital. However, further tests indicate for teams that human capital variety positively moderates the effect of social capital on performance.
    Keywords: Entrepreneurship, Nascent entrepreneurship, Social capital, Start-up teams, Entrepreneurial learning
    JEL: M13 L25 L26 D83
    Date: 2010–02–24
  3. By: Túlio A. Cravo (Dept of Economics, Loughborough University); Adrian Gourlay (Dept of Economics, Loughborough University); Bettina Becker (Dept of Economics, Loughborough University)
    Abstract: This paper examines the relationship between the Small and Medium Enterprise (SME) sector and economic growth for an annual panel of Brazilian states for the period 1985-2004. We investigate the importance of the relative size of the SME sector measured by the share of the SME employment in total formal employment and the level of human capital in SMEs measured by the average years of schooling of SME employees. The empirical results indicate that the relative importance of SMEs is negatively correlated with economic growth, a result that is consistent with previous studies examining developing countries. In addition, our results also show that human capital embodied in SMEs may be more important for economic growth than the relative size of the SME sector.
    Keywords: Firm size, market structure, economic growth, human capital.
    JEL: O1 O15 L1
    Date: 2010–01
  4. By: Bravo-Ortega, Claudio; Lederman, Daniel
    Abstract: Numerous studies predict that developing countries with low human capital may not benefit from the strengthening of intellectual property rights. The authors extend an influential theoretical framework to highlight the role of intellectual property rights in the process of innovation and structural change. The resulting theory is consistent with a stylized fact that appears in the data, namely that countries with poor intellectual-property protection may accumulate human capital without a corresponding increase in research and development investment as a share of national income. The model predicts that without minimum intellectual-property protection, additional education may result in more imitation rather than innovation. The preponderance of the econometric evidence presented in this paper suggests that interactions between human capital and intellectual property rights determine global patterns of research and development effort, and intellectual property rights tend to raise the effect of education on the incidence of research and development.
    Keywords: Economic Theory&Research,E-Business,Debt Markets,Labor Policies,Knowledge for Development
    Date: 2010–02–01
  5. By: Marco Sunder
    Abstract: We analyze the timing of birth of the first three children based on German panel data (GSOEP) within a hazard rate framework. A random effects estimator is used to accommodate correlation across spells. We consider the role of human capital – approximated by a Mincer-type regression – and its gender-specific effects on postponement of parenthood and possible recuperation at higherorder births. An advantage of the use of panel data in this context consists in its prospective nature, so that determinants of fertility can be measured when at risk rather than ex-post, thus helping to reduce the risk of reverse causality. The analysis finds evidence for strong recuperation effects, i.e., women with greater human capital endowments follow, on average, a different birth history trajectory, but with negligible curtailment of completed fertility.
    Keywords: fertility,humancapital,eventhistoryanalysis
    JEL: J13
    Date: 2010–02
  6. By: Michaelides, Marios
    Abstract: This paper uses data from Project GATE to examine the efficacy of offering free self-employment assistance to unemployed individuals interested in self-employment, overall and by race. We also examine the effect of participants’ self-employment background, finances, and personal circumstances on their self-employment outcomes. We find that Project GATE led to significant gains in the outcomes of unemployed participants, particularly for black participants. Our analyses also show that significant portions of the race disparities in self-employment outcomes among unemployed participants are attributed to race differences in access to financing. The policy implications of our findings are discussed.
    Keywords: self-employment; small business; unemployment; workforce development; SEA; Project GATE
    JEL: H4 J6 L2
    Date: 2010–02–01
  7. By: Krishnan, P.; Krutikova, S.
    Abstract: We examine the impact of a programme designed to raise the psychosocial skills (self-esteem and self-efficacy) and aspirations of children in the slums of Bombay. We use a cross-cutting design with two comparison groups of peers for young adults who have attended the programme until leaving high school to analyse whether, compared to those from a similar environment and background, enrollment in the programme demonstrably raises psychosocial skills. We also use extensive data on parental background and psychosocial skills to construct difference-in-difference estimates that account for for family-level ob- servables and unobservables. This is a non-randomised evaluation: hence, we are cautiously optimistic in our finding of substantial impacts on both self-esteem and self-efficacy, as well as evidence of an impact on aspirations. Furthermore, in line with the literature, both self-esteem and self-efficacy are positively related to success in school-leaving examinations and initial labour market outcomes.
    Date: 2010–01–29
  8. By: Karsten Albæk (Department of Economics, University of Copenhagen)
    Abstract: The present paper analyses employment subsidies to vocational training under union wage bargaining. The analysis includes an investigation of the consequences of financing the subsidy by a levy on employment, which is the typical way of financing these types of subsidies in many countries. The paper demonstrates high incidence rates of subsidies to vocational training under standard assumptions about the preference structure of the union. The financing scheme appears to counteract the purpose of the subsidy.
    Date: 2010–02

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