nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒07‒17
nine papers chosen by
Fabio Sabatini
Euricse and University of Trento

  1. Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis By Elizabeth M. King; Claudio E. Montenegro; Peter F. Orazem
  2. Altrusim. Education Subsidy and Growth By Armellini, Mauricio; Basu, Parantap
  3. The role of social trust in reducing long-term truancy and forming human capital in Japan By Yamamura, Eiji
  4. Scientific mobility and development: toward a socioeconomic conceptual framework By Woolley, Richard; Cañibano, Carolina
  5. Beyond the mean gender wage gap: Decomposition of differences in wage distributions using quantile regression By Heinze, Anja
  6. School Competition and Students' Entrepreneurial Intentions: International Evidence Using Historical Catholic Roots of Private Schooling By Falck, Oliver; Woessmann, Ludger
  7. The costs of illiteracy in South Africa By Martin Gustafsson; Servaas van der Berg; Debra Shepherd; Cobus Burger
  8. Peer Effects and the Promise of Social Mobility: A Model of Human Capital Investment By Chris Bidner
  9. Public spending on education: Its impact on students skipping classes and completing school By Yamamura, Eiji

  1. By: Elizabeth M. King; Claudio E. Montenegro; Peter F. Orazem
    Abstract: T.W. Schultz (1975) proposed that returns to human capital were highest in economic environments where technology, price or production shocks were common and managerial skills to adapt resource allocations to those shocks were most in need. We hypothesize that variation in returns to human capital across developing countries can be explained in part by government institutions that blunt the magnitude of those shocks or that limit individual abilities to respond to those shocks. Using estimated returns to schooling and experience from 122 household surveys from 86 developing countries, we demonstrate a strong positive correlation between economic freedom and returns to human capital. The positive effect is observed at all quantiles of the wage distribution. Economic freedom benefits the most skilled who get higher returns to schooling; but it also benefits the least skilled who get higher returns from experience.
    Keywords: Returns to Education; Returns to Experience; Economic Freedom, Inequality; Quantiles.
    JEL: J31 O15 P10
    Date: 2010–07
  2. By: Armellini, Mauricio; Basu, Parantap
    Abstract: An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries.
    Keywords: Human Capital; Altrusim; Education Subsidy;
    JEL: D90
    Date: 2010–07–03
  3. By: Yamamura, Eiji
    Abstract: This paper attempts to examine how social trust influences human capital formation using prefectural level data in Japan. To this end, I constructed a proxy for social trust, based on the Japanese General Social Surveys. After controlling for socioeconomic factors, I found that social trust plays an important role in reducing the rate of long-term truancy in primary and junior high school. Results suggest that social trust improves educational quality and plays a critical role in human capital formation in developed countries.
    Keywords: human capital; educational economics; economic impact
    JEL: Z13 A21
    Date: 2010–06–30
  4. By: Woolley, Richard; Cañibano, Carolina
    Abstract: The purpose of this paper is to contribute to the theoretical discussion of scientific mobility in order to progress understanding of the role it plays in shaping and fostering knowledge transfers, which in turn could benefit the scientific and technological advancement of developing countries. We use Callon?s socioeconomics of scientific research (1994, 2002) as the theoretical basis for posing the question: to what extent are the components of scientific knowledge embodied in scientific human capital (tacit knowledge, scientific skills, problem solving capabilities, etc.) actually appropriable and rival? Mainstream economics assumes that rivalry and appropriability are intrinsic properties of human capital. We argue, however, that ?external? factors, particularly the configuration of networks, play a role in determining the degree of rivalry and appropriability of knowledge embodied in scientific human capital, turning therefore these characteristics into extrinsic (and not intrinsic) ones. This has important consequences for the analysis of economic allocation and distribution of human capital and for the understanding of scientific mobility and the circulation and replication of knowledge. Callon?s framework forces us to think about scientific mobility and its role in the diffusion of scientific knowledge in a different way, using the language of networks and emergent and consolidated configurations.
    JEL: O15 J61 D80
    Date: 2010–07–06
  5. By: Heinze, Anja
    Abstract: Using linked employer-employee data, this study measures and decomposes the differences in the earnings distribution between male and female employees in Germany. I extend the traditional decomposition to disentangle the effect of human capital characteristics and the effect of firm characteristics in explaining the gender wage gap. Furthermore, I implement the decomposition across the whole wage distribution with the method proposed by Machado and Mata (2005). Thereby, I take into account the dependence between the human capital endowment of individuals and workplace characteristics. The selection of women into less successful and productive firms explains a sizeable part of the gap. This selection is more pronounced in the lower part of the wage distribution than in the upper tail. In addition, women also benefit from the success of firms by rent-sharing to a lesser extent than their male colleagues. This is the source of the largest part of the pay gap. Gender differences in human capital endowment as well as differences in returns to human capital are less responsible for the wage differential. --
    Keywords: gender wage gap,decomposition,quantile regression
    JEL: J16 J31
    Date: 2010
  6. By: Falck, Oliver (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: School choice research mostly focuses on academic outcomes. Policymakers increasingly view entrepreneurial traits as a non-cognitive outcome important for economic growth. We use international PISA-2006 student-level data to estimate the effect of private-school competition on students' entrepreneurial intentions. We exploit Catholic-Church resistance to state schooling in 19th century as a natural experiment to obtain exogenous variation in current private-school shares. Our instrumental-variable results suggest that a 10 percentage-point higher private-school share raises students' entrepreneurial intentions by 0.3-0.5 percentage points (11-18 percent of the international mean) even after controlling for current Catholic shares, students' academic skills, and parents' entrepreneurial occupation.
    Keywords: private school competition, entrepreneurship, Catholic schools
    JEL: I20 L33 L26 Z12
    Date: 2010–06
  7. By: Martin Gustafsson (Department of Economics, University of Stellenbosch); Servaas van der Berg (Department of Economics, University of Stellenbosch); Debra Shepherd (Department of Economics, University of Stellenbosch); Cobus Burger (Department of Economics, University of Stellenbosch)
    Abstract: In South Africa there has been a surge in publicly funded adult literacy education in recent years. There is a recognition that for the effective monitoring of adult literacy, direct measures of literacy are required. Grade attainment, self-reported ability to read and behavioural variables relating to, for instance, reading habits produce vastly different measures of adult literacy in South Africa. It is noteworthy that self-reported values change over time as people’s perceptions of what consitutes literacy shifts. A 75% literacy rate is arguably a plausible figure, though the absence of a direct measure is problematic. An education production function suggests that literacy-related parent behaviour, independently of parent years of education, influences performance of learners in school. In a multivariate employment model, self-reported literacy is a statistically significant predictor of being employed. In a cross-country growth model, poor quality schooling emerges as the variable requiring the most urgent policy attention to sustain and improve South Africa’s economic development. Both microeconomic and macroeconomic estimates suggest that with a more typical level of school performance South Africa’s GDP would be 23% to 30% higher than it currently is.
    Keywords: Literacy, Illiteracy, South Africa, Education production function, Economic growth
    JEL: C35 D23 I28 O15
    Date: 2010
  8. By: Chris Bidner (School of Economics, University of New South Wales)
    Abstract: I analyze a model of human capital development in the presence of peer effects. Parents invest in their child, and this investment conveys a positive externality upon the child’s peers. Parents also acquire wealth, which i) finances consumption, and ii) determines a child’s peer group. I show how the freedom to compete for desirable peers exacerbates the natural underinvestment problem. The analysis thereby produces a general equilibrium framework in which the inefficiencies displayed in a rat-race interact with those stressed in the multi-tasking literature. I consider an extension in which both wealth and parental investment are observed with noise.
    Keywords: Peer Effects; Premarital Investment; Matching; Human Capital
    JEL: D13 C78 D62 J24 D82
    Date: 2010–05
  9. By: Yamamura, Eiji
    Abstract: Empirical results using cross-country data suggest that public spending on education increases the rate of students skipping school but does not influence the rate of students completing school. This infers that public spending on education leads to a deterioration in the effectiveness of education.
    Keywords: Public spending; education; skipping class; incentive;
    JEL: I21 H52
    Date: 2010–06–30

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