nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒06‒18
nine papers chosen by
Fabio Sabatini
University of Siena

  1. Return Migration, Human Capital Accumulation and the Brain Drain By Christian Dustmann; Itzhak Fadlon; Yoram Weiss
  2. Entrepreneurship and Human Development: A Capability Approach By Gries,Thomas; Naudé, Wim
  3. The Investment in Job Training: Why Are SMEs Lagging So Much Behind? By Almeida, Rita K.; Aterido, Reyes
  4. Training Participation of an Aging Workforce in an Internal Labor Market By Pfeifer, Christian; Janssen, Simon; Yang, Philip; Backes-Gellner, Uschi
  5. Income taxes, subsidies to education, and investments in human capital By C. Mendolicchio; D. Paolini; T. Pietra
  6. High skills, high growth: is tourism an exception? By A.DiLiberto
  7. Education and the Political Economy of Environmental Protection. By Natacha Raffin
  8. The GED By Heckman, James J.; Humphries, John Eric; Mader, Nicholas S.
  9. Entrepreneurship in India - The Question of Occupational Transition By Erik Monsen; Prashanth Mahagaonkar; Christian Dienes

  1. By: Christian Dustmann (Department of Economics and Centre for Research and Analysis of Migration, University College London); Itzhak Fadlon (Department of Economics, Harvard University); Yoram Weiss (The Eitan Berglas School of Economics, Tel Aviv University)
    Abstract: In this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently, and where the return to human capital is highest. The basic framework is a dynamic Roy model in which a worker possesses two distinct skills that can be augmented by learning by doing. There are different implicit prices, in different countries and different rates of skill accumulation. Our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selection of emigrants and return migrants that are not immediately compatible with the one-dimensional skill model. Our analysis also has implications for the debate on brain drain and brain gain. In the two skills model presented here, return migration can lead to a mitigation of the brain drain, or even the creation of a "brain gain", where those who return bring the home country augmented local skills.
    Keywords: Return migration, human capital accumulation, comparative advantage, brain drain.
    JEL: J3 J6 F2
    Date: 2010–06
  2. By: Gries,Thomas; Naudé, Wim
    Abstract: We provide a formal model of entrepreneurship in human development. The framework is provided by the capabilities approach (CA). Hence we extend not only the conceptualisation of entrepreneurship in development, but the reach of the CA into entrepreneurship. From a CA view, entrepreneurship is not only a production factor, or a means to an end, as is often taken to be the case by economists, but also an end in itself. Entrepreneurship can be a human functioning and can contribute towards expanding the set of human capabilities through being both a resource and a process. Our model shows, however, that entrepreneurship is not automatically a functioning. Where it is a necessity it stops being a valued functioning. The model also shows that even when entrepreneurship is valued, entrepreneurs may often not match their ideas with suitable opportunities. Policy implications are discussed.
    Keywords: capability approach, entrepreneurship, human development
    Date: 2010
  3. By: Almeida, Rita K. (World Bank); Aterido, Reyes (World Bank)
    Abstract: This paper analyzes the link between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, we show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and level of development. However, our findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting SMEs. Rather, our evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, our findings call for caution when designing pro-SME policies fostering the investment in on the job training.
    Keywords: on-the-job training, firm size, firm level data, developing countries
    JEL: J24 D24
    Date: 2010–05
  4. By: Pfeifer, Christian; Janssen, Simon; Yang, Philip; Backes-Gellner, Uschi
    Abstract: We use a long panel data set for four entry cohorts into an internal labor market to analyze the effect of age on the probability to participate in different training measures. We find that training participation probabilities are inverted u-shaped with age and that longer training measures are undertaken earlier in life and working career, respectively. These findings are consistent with predictions from a human capital model which incorporates amortization period and screening effects. Our results point to a market failure in the context of human capital investments to increase employability of older workers.
    Keywords: Human capital, Internal labor markets, Training
    JEL: J14 J24 M53
    Date: 2010–04
  5. By: C. Mendolicchio; D. Paolini; T. Pietra
    Abstract: We study a two-sector economy with investments in human and physical capital and imperfect labor markets. Human and physical capital are heterogeneous. Workers and firms endogenously select the sector they are active in, and choose the amount of their sector-specific investments in human and physical capital. To enter the high-skill sector, workers must pay a fixed cost that we interpret as direct cost of education. Given the distribution of the agents across sectors, at equilibrium, in each sector there is underinvestment in both human and physical capital, due to non-contractibility of investments. A second source of inefficiency is related to the self-selection of the agents into the two sectors. It typically induces too many workers to invest in education. Under suitable restrictions on the parameters, the joint effect of the two distortions is that equilibria are characterized by too many people investing too little effort in the high skill sector. We also analyze the welfare properties of equilibria and study the effects of several tax-subsidy policies on the total expected surplus.
    JEL: J24 H2
    Date: 2010–05
  6. By: A.DiLiberto
    Abstract: Despite the emphasis placed by growth models on technological progress, recent empirical evidence shows that tourism, a low-skill/low-tech sector and one of the fastest growing industries in the world, may offer a beneficial specialization strategy for growth. This paper focuses on a balanced panel of 72 countries (1980-2005) and confirms that the tourism sector indicator is always positive and significant in growth regressions. Moreover, results also imply that increased education contribute to growth and that the role of the tourism sector is significantly larger in countries with higher aggregate levels of human capital. Our main results are robust to the inclusion of additional variables and the use of alternative estimators in the regression analysis. Overall, this study confirms that the expansion of a low-tech sector such as tourism may be a valuable strategy for development. But it also suggests that an increase in human capital endowments is always beneficial, even when the development strategy focuses on the expansion of a (successful) unskilled sector.
    Keywords: Economic development; Tourism; Human capital
    JEL: I21 O15
    Date: 2010
  7. By: Natacha Raffin (Paris School of Economics - Centre d'Economie de la Sorbonne)
    Abstract: We develop a political economy model that might explain the different environmental performance of countries, through educational choices. Individuals decide whether to invest in additional education according to their expectations regarding future environmental quality. They also vote on a tax that will be exclusively used to finance environmental protection. We show that the model may generate multiple equilibria and agents' expectations may be self-fulfilling when the public policy is endogenous. Then, we analyse the long-term implications of a public policy that would favour education and make it possible to select the higher equilibrium.
    Keywords: Environmental quality, human capital, education, self-fulfilling prophecies, public policy.
    JEL: I28 H20 O16 O40 Q58
    Date: 2010–05
  8. By: Heckman, James J. (University of Chicago); Humphries, John Eric (University of Chicago); Mader, Nicholas S. (University of Chicago)
    Abstract: The General Educational Development (GED) credential is issued on the basis of an eight hour subject-based test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation's educational context.
    Keywords: returns to education, GED, dropouts, graduation rate, noncognitive skills
    JEL: I21 J24 J31
    Date: 2010–05
  9. By: Erik Monsen (Max Planck Institute of Economics, Germany); Prashanth Mahagaonkar (University of Wuppertal, Germany); Christian Dienes (University of Wuppertal, Germany)
    Abstract: Occupational transition from salaried to self-employment is an important issue in developed economies, but is even more critical in emerging economies, as individuals' occupational choices can drive economic development. Using data on 3637 individuals from India, we examine the effect of regional factors on actual and intended transition. We find that self-employment and unemployment rates decrease actual and intended transition, and the effects are at least four times greater than that of individual-level factors. In addition, we find that urban versus rural location moderates the effects of income ratios and state GDP, with the effects being greater in rural locations.
    Keywords: Occupational Transition, Self-Employment, Emerging Economies
    JEL: J24 J62 L26 O12 O18 O53
    Date: 2010–06

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