nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒03‒28
ten papers chosen by
Fabio Sabatini
University of Siena

  1. The Evolution of the Returns to Human Capital in Canada, 1980-2005 By Boudarbat, Brahim; Lemieux, Thomas; Riddell, Craig
  2. The Returns to English-Language Skills in India By Azam, Mehtabul; Chin, Aimee; Prakash, Nishith
  3. Optimal education and pensions in an endogenous growth model By DEL REY, Elena; LOPEZ-GARCIA, Miguel
  4. Diversification in Children By Jinyoung Kim
  5. The joint effect of human capital and income inequalities on HIV/AIDS prevalence: An exploratory investigation By Annim, Samuel Kobina; Dasmani, Isaac
  6. The Opening Up of Eastern Europe at 20-Jobs, Skills, and ‘Reverse Maquiladoras’ in Austria and Germany By Marin, Dalia
  7. Human capital and start-up success of nascent entrepreneurs By Jolanda Hessels; U. Brixy
  8. Higher Education Attainment: The Case of Intergenerational Transmission of Education in Portugal By Pereira, Pedro T.
  9. Higher education and youth transition from school to labour market: The Spanish case By Marta Rohana Lopez
  10. Education and the Welfare Gains from Employment Protection By Charlot, Olivier; Malherbet, Franck

  1. By: Boudarbat, Brahim (University of Montreal); Lemieux, Thomas (University of British Columbia, Vancouver); Riddell, Craig (University of British Columbia, Vancouver)
    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: 2010–03
  2. By: Azam, Mehtabul (Southern Methodist University); Chin, Aimee (University of Houston); Prakash, Nishith (Dartmouth College)
    Abstract: India's colonial legacy and linguistic diversity give English an important role in its economy, and this role has expanded due to globalization in recent decades. It is widely believed that there are sizable economic returns to English-language skills in India, but the extent of these returns is unknown due to lack of a microdata set containing measures of both earnings and English ability. In this paper, we use a newly available data set – the India Human Development Survey, 2005 – to quantify the effects of English-speaking ability on wages. We find that being fluent in English (compared to not speaking any English) increases hourly wages of men by 34%, which is as much as the return to completing secondary school and half as much as the return to completing a Bachelor’s degree. Being able to speak a little English significantly increases male hourly wages 13%. There is considerable heterogeneity in returns to English. More experienced and more educated workers receive higher returns to English. The complementarity between English skills and education appears to have strengthened over time. Only the more educated among young workers earn a premium for English skill, whereas older workers across all education groups do.
    Keywords: English language, human capital, India
    JEL: J31 J24 O15
    Date: 2010–03
  3. By: DEL REY, Elena (Universitat de Girona, Spain); LOPEZ-GARCIA, Miguel (Universitat Autonoma de Barcelona, Spain)
    Abstract: It is well known that, in OLG economies with life-cycle saving and exogenous growth, competitive equilibria will in general fail to achieve optimality and may even be dynamically inefficient. This is a consequence of individuals accumulating amounts of physical capital that differ from the level which would maximize welfare along a balanced growth path (the Golden Rule). With human capital, a second potential source of departure from optimality arises, to wit: individuals may not choose the correct amount of education investment. However, the Golden Rule concept, widely used in exogenous growth frameworks, has not found its way into endogenous growth models. In this paper, we propose to recover the Golden Rule of physical and also human capital accumulation. The optimal policy to decentralize the Golden Rule balanced growth path when there are no constraints for individuals to finance their education investments is also characterized. It is shown that it involves positive pensions and negative education subsidies (i.e., taxes)
    Keywords: endogenous growth, human capital, intergenerational transfers, education policy
    JEL: D90 H21 H52 H55
    Date: 2009–12–01
  4. By: Jinyoung Kim (Korea University)
    Abstract: This paper develops a dynamic model of the decisions regarding the quantity and quality of children, predicated on two premises: (1) the quality of children is uncertain when parents make a human capital investment decision, and (2) the quality distributions of two children of a woman are less correlated if they are farthered by different men than by the same man, as the result of either (or both) genetic inheritance or father-specific training. It follows logically that a parent seeks to hedge the risk of children quality by having childrent fathered by different men, or by diversifying their portfolio of children. We derive and test discriminating propositions concerning chlid diversification and human capital investment in children. Consistent with these propositions, our empirical results show that women with less education, more income, and higher degrees of income uncertainty are more likely to diversify. We also demonstrate that human capital investment in a child fathered by a new mate is lower, and that higher degrees of income uncertainty increase investment.
    Keywords: Fertility, Quality of Children, Human capital, Diversification
    JEL: J13 J12
    Date: 2010
  5. By: Annim, Samuel Kobina; Dasmani, Isaac
    Abstract: The evidence of higher income inequality leading to increased HIV prevalence through channels of coercion and migration has emerged. This coupled with previously established macroeconomic impact of HIV/AIDS connotes reverse causality that is likely to develop a cyclical effect. The plausible cyclicality can be identified through the mergence of a three stage relationship. Initially from income inequality to HIV prevalence; then from HIV prevalence to reduced human capital formation and subsequently generating human capital inequality via reduced investment in human capital of affected households and back to income inequality. We hypothesize that the effect of this plausible cyclicality is likely to increase the effect of income inequality on HIV prevalence. Our aim is to assess the effect of productivity gaps measured by human capital dispersion on the relationship between income inequality and HIV prevalence. Deriving 1999 dataset on human capital dispersion which is measured by years of schooling, quality of school system and rates of return for 99 countries, we estimate its linear dependence effect with income inequality on HIV prevalence. We find a more significant and increased effect of income inequality on HIV prevalence of more than three times. This study sets the platform for using current datasets and generates a policy discussion for addressing productivity gaps as one of HIV/AIDS interventions.
    Keywords: HIV/AIDS Prevalence; Human Capital; Inequality; Income ; Education
    JEL: I12 I10
    Date: 2010–02
  6. By: Marin, Dalia
    Abstract: Many people in the European Union fear that Eastern Enlargement leads to major job losses. More recently, these fears about job losses have extended to high skill labor and IT jobs. The paper examines with unique firm level data whether these fears are justified for the two neighboring countries of Eastern Enlargement Austria and Germany. We find that Eastern Enlargement leads to surprising small job losses of less than 0.5 percent of total employment in Germany and of 1.5 percent in Austria, because jobs in Eastern Europe do not compete with jobs in Austria and Germany. Low cost jobs of affiliates in Eastern Europe help Austrian and German firms to stay competitive in an increasingly competitive environment. However, we also find that multinational firms in Austria and Germany are outsourcing skill intensive activities to Eastern Europe taking advantage of cheap abundant skilled labor there. We find that the firms’ outsourcing activities to Eastern Europe are a response to a human capital scarcity in Austria and Germany which has become particularly severe in the 1990s. We indeed find a reverse pattern of ‘Maquiladoras’ emerging with Eastern Enlargement in Austria and Germany compared to what economists have found for the North American Free Trade Agreement. Skilled workers in Austria and Germany are losing from outsourcing. In both countries outsourcing contributes 35 percent and 41 percent, respectively, to changes in relative wages for skilled workers in Austria and Germany. To address the skill exodus to Eastern Europe we suggest liberalizing the movement of high skill labor.
    Keywords: human capital; intra-firm trade; multinationals and jobs; outsourcing to Eastern Europe; R&D policy
    JEL: F21 F23 J24 J31 L24 O3 P33
    Date: 2010–03
  7. By: Jolanda Hessels; U. Brixy
    Abstract: We explore the role of human capital aspects in explaining whether nascents succeed in the start-up of a new venture. The data used are based on a survey among nascent entrepreneurs in Germany and the Netherlands supplemented by follow-up interviews one year after the first contact. Applying multinomial probit estimations we find that several human capital aspects are related to the probability of getting the business started. For example, a high general degree of human capital (i.e. holding a university degree) lowers the likelihood to succeed in the start-up of the venture, whereas recent employment experience (as opposed to being unemployed or out of the labor force) increases start-up success. Furthermore, we find that specialists are more likely to succeed in getting their business started than generalists.
    Date: 2010–03–18
  8. By: Pereira, Pedro T. (University of Madeira)
    Abstract: The lack of formal education and competences of the Portuguese workers is one of the biggest problems of the country. This lack is disappearing as quickly as desired and the young generations still lag far behind those in other OECD countries. This paper studies the intergenerational transmission of education achievement, in particular higher education completion, seeking to determine the influence on future attainment of parents’ education and labor market conditions while the child was growing up. We conclude that the education of the parents is very important, even if it is only one of them that has it. This influence seems not to be independent of the gender of the parent who has it. The fact that the parents face unemployment has a negative effect on the educational achievement of the child. Females generally perform better than males, but there are exceptions. For instance, it is significantly lower if the father has low education and the mother has secondary or higher education.
    Keywords: demand for schooling, human capital, parent’s education
    JEL: I21 I28 J11
    Date: 2010–03
  9. By: Marta Rohana Lopez
    Abstract: Using a specific data set drawn from the Spanish Module Education to Labour Market Transitions (2000), this paper analyses the labour market entrance of Spanish school leavers and the match between education and work at the early stages of working life. Moreover, special attention is paid to graduates, because Spain experienced a strong growth in the demand for higher education during the last decades of 20th century. The empirical evidence shows that, besides other personal and family individual's characteristics, human capital exerts a strong influence on the finding of an employment. With regard to the match between education and work, the results indicate that over-education is a common phenomenon in the Spanish youth labour market. However, unlike what one could expect, being a graduate seems to be associated to a lower likelihood of over-education in the first employment.
    Keywords: university education, school to work transition, mismatch in the labour market, Spain
    Date: 2009–07
  10. By: Charlot, Olivier (Université des Antilles et de la Guyane); Malherbet, Franck (University of Cergy-Pontoise)
    Abstract: This paper studies the impact of an European-like labor market regulation on the return to schooling, equilibrium unemployment and welfare. We show that firing costs and temporary employment have opposite effects on educational choices. We furthermore demonstrate that a laissez faire economy with no regulation is inefficient as it is characterized by insufficient educational investments leading to excess job destruction and inadequate job creation. By stabilizing employment relationships, firing costs may spur educational investments and therefore lead to welfare and productivity gains, though a first-best policy would be to subsidize education. However, there is little chance for a dual labor market, as is common in many European countries, with heavily regulated long-term contracts and more flexible short-term contracts to raise the incentives to schooling and aggregate welfare.
    Keywords: human capital, job destruction, matching frictions, efficiency
    JEL: I20 J20 J60
    Date: 2010–03

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