nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒06‒26
fourteen papers chosen by
Fabio Sabatini
Euricse and University of Trento

  1. Estimates of Human Capital in Canada: The Lifetime Income Approach By Gu, Wulong; Wong, Ambrose
  2. Market Imperfections and Firm-Sponsored Training By Picchio, Matteo; van Ours, Jan C.
  3. Education and the Political Economy of Environmental Protection By Natacha Raffin
  4. Imperfect Information, On-the-Job Training, and the Employer Size-Wage Puzzle: Theory and Evidence By Feng, Shuaizhang; Zheng, Bingyong
  5. Migration, Skill Composition and Growth By Young-Bae Kim; Paul levine; Emanuela Lotti
  6. The Gender Dimension of Technical Change and Job Polarisation By Joanne Lindley
  7. The Selection of Skills into Sectors: Evidence from the Market for Economists By Boehm , Michael J.; Watzinger, Martin
  8. Gender bias and the female brain drain By Aniruddha Mitra; James T. Bang
  9. Human Development in Europe By Kitty Stewart
  10. Human Development: Definitions, Critiques, and Related Concepts By Sabina Alkire
  11. Human Development and Sustainability By Eric Neumayer
  12. Human Development Trends since 1970: A Social Convergence Story By George Gray Molina and Mark Purser
  13. Curse or Blessing? Natural Resources and Human Development By José Pineda and Francisco Rodríguez
  14. The Crime Reducing Effect of Education By Machin, Stephen; Marie, Olivier; Vujić, Sunčica

  1. By: Gu, Wulong; Wong, Ambrose
    Abstract: This paper produces an estimate of market-based human capital investment and stock for Canada over the period from 1970 to 2007 based on the lifetime income approach and compares it with that of physical and natural capital investment and stock. It adopts the methodology developed by Jorgenson and Fraumeni, and estimates human capital stock as the expected future lifetime income of all individuals. Human capital investment is estimated as changes in human capital stock due to the addition of new members of the working age population arising from the rearing and education of children and the effect of immigration on human capital. The main findings are as follows: 1. The volume of aggregate human capital rose at an annual rate of 1.7% in Canada for the period 1970 to 2007, and most of the growth is due to the increase in the number of individuals in the working-age population. The rising education level of the Canadian population is also a significant contributing factor to the growth in human capital. 2. The compositional effects of aging of the Canadian population (a movement to a population that is older on average) reduced human capital growth by 0.6% per year over the period 1980 to 2007, while the rising education level increased human capital growth by 0.7% per year over the period. 3. Human capital stock on a per capita basis increased at 0.9% per year for the period 1970 to 1980, due to the rising education attainment during the period. After 1980, human capital stock per capita was virtually unchanged due to two offsetting factors: rising education level which increased human capital stock and the compositional effects of population aging, which reduced human capital stock. 4. The value of human capital investment and stock exceeds the value of physical capital investment and stock, and the ratio of human capital investment and stock to physical capital investment and stock declined over time. In 2007, human capital stock is about four times
    Keywords: Economic accounts, Financial and wealth accounts
    Date: 2010–06–16
  2. By: Picchio, Matteo (Tilburg University); van Ours, Jan C. (Tilburg University)
    Abstract: Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms' training expenditures. Instead, product market competition does not have an effect on firm-sponsored training. We conclude that increasing competition through international integration and globalization does not pose a threat to investments in on-the-job training. An increase in labor market flexibility may reduce incentives of firms to invest in training, but the magnitude of this effect is small.
    Keywords: firm-sponsored training, labor market frictions, product market competition, matched worker-firm data
    JEL: D43 J24 J42 L22 M53
    Date: 2010–06
  3. By: Natacha Raffin (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    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.
    Date: 2010–05
  4. By: Feng, Shuaizhang (Princeton University); Zheng, Bingyong (Shanghai University of Finance and Economics)
    Abstract: This paper develops a two-period labor market model with imperfect information and on-the-job training, and uses data from National Longitudinal Survey of Youth 1979 Cohorts (NLSY79) to test its predictions. We find that training does not explain the positive relationship between employer size and wage. In addition, for industries that display size-wage premium, workers in large establishments are more likely to receive on-the-job training but their return to training is smaller. Our theory, substantiated by the new empirical evidence, suggests that it is not large firms, per se, but firms that hire better workers who are paying a wage premium.
    Keywords: imperfect information, sorting, on-the-job training, size-wage premium
    JEL: D83 J31
    Date: 2010–06
  5. By: Young-Bae Kim (University of Surrey); Paul levine (University of Surrey); Emanuela Lotti (University of Southamton and University of Surrey)
    Abstract: The UK, with its relatively liberal immigration policies following recent enlarge- ments, has been one of the main recipients of migrants from new EU member states. This paper poses the questions: what is the effect of immigration on a receiving econ- omy such as the UK? Is the effect beneficial or adverse for growth? Does emigration have brain drain effects on sending economies? How differently would skilled (or un- skilled) migration affect both receiving and sending economies? What factors would contribute to immigration/emigration benefits/costs and economic growth driven by migration? Who are the winners and losers in both the sending and host regions? We utilize an endogenous growth two-bloc model with labour mobility of different skill compositions to address these questions. We show that migration, in general, is beneficial to the receiving country and increases the world growth rate. With remit- tances, the sending country in aggregate can also benefit. The only exception is in the case of unskilled migration, which can actually have a detrimental impact on the world growth rate. This possibility however seems to be unlikely by our examination of migration trends. Winners are migrants, and the skill group in the region that sees its relative size decrease.
    Keywords: Migration, Labour mobility, Skill composition, Economic growth
    JEL: F22 F43 J24 J61 O41
    Date: 2010–06
  6. By: Joanne Lindley (University of Surrey)
    Abstract: Many studies have shown that technical change has led to job polarisation. A relatively unexplored aspect of this is whether there has been a gender bias. This paper is the first to show gender bias in technology driven skill polarisation. Between 1997 and 2006 the demand for women shows hollowing out across high, medium and low education groups, as a consequence of technical change. This was not the case for men. Decomposing the fall in the gender pay gap shows further evidence for gender biased technological change. For moderate and complex computer users the fall in the gender pay gap remains largely unexplained suggesting gender biased demand shifts have significantly contributed to the closing of the gender pay gap.
    Keywords: Gender Pay, Task-Bias Technology Change, Skills
    JEL: J01 J16 J2 J31
    Date: 2010–06
  7. By: Boehm , Michael J.; Watzinger, Martin
    Abstract: We study the selection of skills into sectors in an environment with (1) exogenous variation in the attractiveness of sectors and (2) good measurability of skills. More concretely, we examine how the selection into leading economics PhD programs varies with the business cycle and we measure PhD’s skills by their publication success. Our results strongly support a selection story: cohorts applying fora PhD- and graduating from a PhD during recession achieve a substantially better publication record if they stay in academia after graduating.
    Keywords: Sectoral Selection; Skill Composition; Business Cycle; Careers
    JEL: I29 J44 J24
    Date: 2010–06
  8. By: Aniruddha Mitra; James T. Bang
    Abstract: This paper contributes to the emerging literature on gender differences in the causes and consequences of brain drain. Differentiating between gender bias in the access to economic opportunities and gender differentials in economic outcomes, we find that differences in access have a significant impact on the emigration of highly-skilled women relative to that of men. However, differentials in outcomes do not have a significant impact. Additionally, the structure of political institutions in the source countries does not have a significant impact on the difference in emigration rates.
    Keywords: immigration, gender, brain drain
    JEL: F22 O15
    Date: 2010
  9. By: Kitty Stewart (London School of Economics and Political Science)
    Abstract: This paper examines levels and trends in human development in the 27 European Union Member States and four of the EU’s nearest neighbours (Iceland, Switzerland, Norway and Turkey). Its starting point is the UNDP Human Development Index but the paper goes beyond the HDI in three main ways. First, drawing on the Human Poverty Index, it sets countries more exacting standards for the three core elements of human development – income, health and education – by looking at progress for the bottom as well as trends in average national achievement, and by defining that progress in relation to national rather than global standards. Second, the paper provides evidence about disparities in human development on these core measures by population sub-groups (gender, geography, social class, ethnic background and migrant status). Third, the paper brings in wider aspects of human development. The three core elements might be thought of as giving people capabilities, but their ability to convert these capabilities into functionings (to lead happy and fulfilling lives, to exercise autonomy, to be active in social and political affairs) will depend not just on their individual characteristics but on the shape of the societies in which they live. The paper therefore looks at overall income equality, agency and empowerment in politics and in employment, social trust and environmental sustainability.
    Keywords: Human Development, Europe, inequality, agency, empowerment
    JEL: I00 I30 Y80
    Date: 2010–06
  10. By: Sabina Alkire (Oxford Poverty and Human Development Initiative, Oxford Department of International Development, Queen Elizabeth House, University of Oxford)
    Abstract: The purpose of this background paper is: i) to synthesize the discussions regarding the concept of human development, so as to inform the 2010 Report’s definition, and ii) drawing on the extensive policy and academic literatures, to propose relationships between the concept of human development and four related concepts: the Millennium Development Goals, Human Rights, Human Security, and Happiness. Inequality, the duration of outcomes across time, and environmental sustainability are also prominent due to their fundamental importance.
    Keywords: human development, capability approach, Millennium Development Goals, human security, human rights, inequality, environment, happiness, process freedom
    JEL: D6 I3 O1 A13 B5 B2 F0
    Date: 2010–06
  11. By: Eric Neumayer (London School of Economics and Political Science)
    Abstract: The literatures and debates on human development on the one hand and sustainability on the other share much in common. Human development is essentially what sustainability advocates want to sustain and without sustainability, human development is not true human development. Yet the two strands of research have largely been separate and this paper shows how they can learn from each other. I put forward a concrete proposal on how human development and its measurement in the form of the Human Development Index (HDI) can be linked with measures of both weak and strong sustainability. Weak sustainability is built on the assumption that different forms of capital are substitutable, whereas strong sustainability rejects the notion of substitutability for certain critical forms of natural capital. Empirical results over the period 1980 to 2006 show that many of the lowest performing countries on the HDI also face problems of weak unsustainability, as measured by genuine savings. Countries with high to very high HDI performance, on the other hand, typically appear to be strongly unsustainable, as measured by ecological footprints, mostly because of unsustainably large carbon dioxide emissions. Two of the biggest challenges facing mankind this century will be to break the link between high human development and strongly unsustainable damage to natural capital on the one hand, requiring a very significant and rapid decarbonisation of their economies, and assisting countries with very low human development to overcome weak unsustainability by raising their investment levels into all forms of capital on the other.
    Keywords: weak sustainability, strong sustainability, Human Development Index, genuine savings, ecological footprints, climate change
    JEL: Q01 Q2 Q3 Q4
    Date: 2010–06
  12. By: George Gray Molina and Mark Purser (Niehaus Center for Globalization and Governance, Princeton University; Human Development Report Office, UNDP)
    Abstract: This paper uses a unique data set of the Human Development Index to describe long-run human development trends for 111 countries, from 1970 to 2005. The first part of the paper shows trends by region, period and index subcomponent. We find that 110 of the 111 countries show progress in their HDI levels over a 35-year period. HDI growth is fastest for low-HDI and middle-HDI countries in the pre-1990 period. The life-expectancy and education subcomponents grow faster than income. The assessment of HDI progress is sensitive to choice of measurement. The second part of the paper focuses on the differences between income and non-income determinants of human development. First, HDI growth converges, both absolutely and conditionally, when running HDI growth rates on initial levels of HD. Second, we find that the income and non-income components of HDI change have a near-zero correlation. Third, we look at determinants of the non-income components of the HDI. We find that income is not a significant determinant of HDI change once we include urbanization, fertility and female schooling. Fourth, we test the effects of institutions, geography and gender on HDI growth. We find that the most robust predictors of HDI growth are fertility and female schooling. We check this result using years of women’s suffrage as an instrument for changes in gender relations, and find that it is a significant predictor of HDI progress for the whole sample.
    Keywords: human development, education, health and demographic trends, cross-country comparisons, measurement and analysis of poverty
    JEL: O15 N30 O50 I32
    Date: 2010–06
  13. By: José Pineda and Francisco Rodríguez (Human Development Report Office, UNDP; Human Development Report Office, UNDP)
    Abstract: This paper argues against a natural resource curse for human development. We find evidence that changes in human development from 1970 to 2005, proxied by changes in the Human Development Index, are positively and significantly correlated with natural resource abundance. While our results are consistent with those of other authors who have recently argued that natural resources do not adversely affect growth, we find strong evidence that natural resources have a positive effect on human development and particularly on its non-income dimensions. However, results from Latin America interactions show that the positive impact of natural resources in this region is significantly smaller than in the rest of the world. These results contribute to a broader discussion about the “resource curse” by showing that natural resources may be a blessing rather than a curse for human development, primarily through its effects on education and health rather than income.
    Keywords: Natural resources, Growth, Development
    JEL: O1 O13 O5
    Date: 2010–06
  14. By: Machin, Stephen (University College London); Marie, Olivier (ROA, Maastricht University); Vujić, Sunčica (London School of Economics)
    Abstract: In this paper, we present evidence on empirical connections between crime and education, using various data sources from Britain. A robust finding is that criminal activity is negatively associated with higher levels of education. However, it is essential to ensure that the direction of causation flows from education to crime. Therefore, we identify the effect of education on participation in criminal activity using changes in compulsory school leaving age laws over time to account for the endogeneity of education. In this causal approach, for property crimes, the negative crime-education relationship remains strong and significant. The implications of these findings are unambiguous and clear. They show that improving education can yield significant social benefits and can be a key policy tool in the drive to reduce crime.
    Keywords: crime, education, offenders
    JEL: I2 K42
    Date: 2010–06

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