nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒10‒16
sixteen papers chosen by
Fabio Sabatini

  1. Productivity and the density of human capital By Jaison R. Abel; Ishita Dey; Todd M. Gabe
  2. Orphanhood and Critical Periods in Children’s Human Capital Formation: Long-Run Evidence from North-Western Tanzania By Jens Hagen; Toman Omar Mahmoud; Natalia Trofimenko
  3. China's Overt Economic Rise and Latent Human Capital Investment: Achieving Milestones and Competing for the Top By Amelie F. Constant; Bienvenue N. Tien; Klaus F. Zimmermann; Jingzhou Meng
  4. Towards comprehensive training By Fares, Jean; Puerto, Olga Susana
  5. Quality and quantity of education in the process of development By Amparo Castelló-Climent; Ana Hidalgo-Cabrillana
  6. The Geographic Distribution of Human Capital: Measurement of Contributing Mechanisms By Peter McHenry
  7. The investment in job training : why are SMEs lagging so much behind? By Almeida, Rita K.; Aterido, Reyes
  8. Emigration and the quality of home country institutions By Frederic DOCQUIER; Elisabetta LODIGIANI; Hillel RAPOPORT; Maurice SCHIFF
  9. Education and the welfare gains from employment protection By Charlot Olivier; Malherbet Franck
  10. A review of national training funds By Johanson, Richard
  11. Plural Form and Franchisors Performance : Early Empirical Findings From Europe By Frédéric Perdreau; Anne-Laure Le Nadant; Gérard Cliquet
  12. Pre-employment vocational education and training in Korea By Chae, ChangKyun; Chung, Jaeho
  13. Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation By Fredrik Andersson; Elizabeth E. Davis; Matthew L. Freedman; Julia I. Lane; Brian P. McCall; L. Kristin Sandusky
  14. Cultivating humanity? Education and capabilities for a global ‘great transition’ By Gasper, D.R.; George, S.
  15. Labor Market Institutions, Firm-specific Skills, and Trade Patterns By Heiwai Tang
  16. Differences between entrepreneurs and employees in their educational paths By Uschi Backes-Gellner; Simone Tuor; Daniela Wettstein

  1. By: Jaison R. Abel (Federal Reserve Bank of New York); Ishita Dey (University at Buffalo); Todd M. Gabe (University of Maine)
    Abstract: We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area’s stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2 to 4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock one standard deviation below the mean realize no productivity gain, while doubling density in metropolitan areas with a human capital stock one standard deviation above the mean yields productivity benefits that are about twice the average.
    Keywords: Agglomeration, productivity, density, knowledge spillovers
    JEL: R12 R30 J24 O40
    Date: 2010
  2. By: Jens Hagen; Toman Omar Mahmoud; Natalia Trofimenko
    Abstract: Losing a parent is a trauma that has consequences for human capital formation. Does it matter at what age this trauma occurs? Using longitudinal data from the Kagera region in Tanzania that span thirteen years from 1991-2004, we find considerable impact heterogeneity across age at bereavement, but less so for the death of opposite-sex parents. In terms of long-term health status as measured by body height, children who lose their same-sex parent before teenage years are hit hardest. Regarding years of formal education attained in young adulthood, boys whose fathers die before adolescence suffer the most. Maternal bereavement does not fit into this pattern as it affects educational attainment of younger and older children in a similar way. The generally strong interaction between age at parental death and sex of the late parent suggests that the preferences of the surviving parent partly protect same-sex children from orphanhood’s detrimental effects on human capital accumulation
    Keywords: orphans, health, education, timing of parental death, child development, Tanzania
    JEL: I10 I21 J19 C23
    Date: 2010–09
  3. By: Amelie F. Constant; Bienvenue N. Tien; Klaus F. Zimmermann; Jingzhou Meng
    Abstract: We provide an overview of China's economic rise through time. Over the past decade, China has maintained 10% growth in GDP, albeit with a GDP per capita at the low level of a developing country. Its tremendous economic development has overlooked the growing social inequalities and rising resentments of the 'cheap' workers and those laid off. The main contributor to its ascension is international trade and investment in physical capital, often at the expense of the environment. The year 1978 was the landmark for the foundation of the Chinese modern higher education system. Since then the number of students enrolled in Chinese higher education institutions has increased dramatically; China is producing serious scholars and a tremendous amount of scholarly output; more and more Chinese students seek higher education abroad; and international students find a rising interest in receiving education in China.
    Keywords: China, human capital, brain drain, higher education
    JEL: F22 J24 N35 O15 O24 O53
    Date: 2010
  4. By: Fares, Jean; Puerto, Olga Susana
    Abstract: Training programs are the most common active labor market interventions around the world. Whether designed to develop skills of young job seekers or upgrading skills of adult workers, training programs are aimed at counteracting employability barriers that hinder the integration of people into the labor markets. Training approaches vary greatly across countries and regions. Some have a focus on classroom lectures while others emphasize training in the workplace. Based on a dataset of studies of training programs from 90 countries around the world, this paper examines the incidence of different training types over time and their impact on labor market outcomes of trainees. The authors find a general pattern of transition from in-classroom training to comprehensive measures that combine classroom and workplace training with supplementary services. Moreover, this transition has paid off. Comprehensive training interventions tend to increase the probability of having positive labor market outcomes for trainees, as compared to in-classroom training only.
    Keywords: Primary Education,Labor Markets,Education For All,Poverty Impact Evaluation,Labor Policies
    Date: 2009–11–01
  5. By: Amparo Castelló-Climent; Ana Hidalgo-Cabrillana
    Abstract: We develop a theory of human capital investment to study through which channels students react to school quality when deciding about their investment in higher education (secondary and above) and how educational quality affects the growth process of an economy. In a dynamic general equilibrium closed economy. higher education requires an extra investment of private resources. whereas primary education is mandatory. The theory states that human capital accumulation raises with quality through two main effects: larger quality increases the number ofpeople with higher education (extensive channel). and it increases the volume of investment in higher schooling per individual (intensive channel). That is. even with perfect capital markets. relatively low quality could discourage opportunities to pursue education beyond primary school. since low quality decreases the returns from higher education. As a result, agents could get stuck at primary levels. The intensive channel establishes that once individuals decide to participate in higher schooling. the larger the quality of educational system. the larger the investment made by each agent. Educational quality may allow for different steps of development and that depending on quality the economy may follow different paths, Using cross-country data, empirical evidence shows that the proposed channels seem to be quantitatively important and that the effect of quality and quantity of education on growth depends on the stage of development.
    Keywords: Quality of education, Human capital composition, Economic growth
    JEL: I21 O11 O15 O4
    Date: 2010–09
  6. By: Peter McHenry (Department of Economics, College of William and Mary)
    Abstract: This paper investigates how the geographic distribution of human capital evolves over time. With U.S. data, I decompose generation-to-generation changes in local human capital into three factors: the previous generation’s human capital, intergenerational transmission of skills from parents to their children, and migration of the children. I find evidence of regression to the mean of local skills at the state level and divergence at the commuting zone level. Labor market size, climate, local colleges, and taxes affect local skill measures. Skills move from urban to rural labor markets through intergenerational transmission but from rural to urban labor markets through migration.
    Keywords: Migration, Intergenerational transmission, Regional labor markets
    JEL: R23 J61 J11
    Date: 2010–09–15
  7. By: Almeida, Rita K.; Aterido, Reyes
    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, the findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting small and medium enterprise sector (SMEs). Rather, our evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, the findings call for caution when designing pro-SME policies fostering the investment in on the job training.
    Keywords: Education For All,Labor Policies,Primary Education,Microfinance,Labor Markets
    Date: 2010–05–01
  8. By: Frederic DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS); Elisabetta LODIGIANI (CREA, Université du Luxembourg and Centro Studi Luca dAgliano); Hillel RAPOPORT (CID, Harvard University, Bar-Ilan University and EQUIPPE); Maurice SCHIFF (World Bank, Development Economics Research Group)
    Abstract: Emigration affects institutions at home in a number of ways. While people may have fewer incentives to voice when they have exit options, emigrants can voice once abroad and contribute to the diffusion of democratic values and norms. We first document these channels and then consider dynamic-panel regressions to investigate the overall impact of emigration on institutions in the home country. We find that both openess to migration and human capital have a positive impact on institutions (as measured by standard democracy and economic freedom indices). This implies that unskilled migration has a positive effect on institutional quality while the effect of skilled migration (or brain drain) is ambiguous. Using the point estimates from our regressions, we simulate the marginal effect of skilled emigration on institutional quality. In general, the simulations confirm that the brain drain has an ambiguous impact on institutions, though a significant institutional gain obtains for a limited set of countries when incentive effects of the brain drain on human capital formation are taken into account.
    Keywords: Migration, brain drain, institutions, diaspora effects, democracy
    JEL: O1 F22
    Date: 2010–09–20
  9. By: Charlot Olivier; Malherbet Franck (Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise.; Universite de Cergy-Pontoise, THEMA, F-95000 Cergy-Pontoise, IZA and fRDB.)
    Abstract: In this paper, we generalize the study of the return to education undertaken in e.g. Laing, Palivos and Wang (1995) or Burdett and Smith (2002) to an environment where the link between education and employment stability is taken into account. This enables us to study how an European-like and Employment Protection Legislation (EPL) with heavily regulated long-term contracts and more flexible short-term contracts affects the return to schooling, equilibrium unemployment and welfare. In this context, we show that ¯ring costs and temporary employment have opposite effects on the rate of use of human capital and thus, on educational investments. 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 (European-like) EPL to raise the incentives to schooling and aggregate welfare.
    Keywords: human capital; job destruction; matching frictions; efficiency
    JEL: I20 J20 J60
    Date: 2010
  10. By: Johanson, Richard
    Abstract: This review identifies over sixty countries that have or had pre-employment and enterprise training funds. The characteristics, advantages, and limitations of each are presented as well as key design questions and examples of good practice. National training funds are an increasingly common vehicle for financing training. The review presents a typology of three main types of training funds by purpose: pre-employment training funds, enterprise training funds, and equity training funds. The review points to a lack of rigorous evaluation of the impact of training funds on the skills and employability of the workforce in developing countries.
    Keywords: Primary Education,Education For All,Access&Equity in Basic Education,Vocational&Technical Education,Labor Policies
    Date: 2009–11–01
  11. By: Frédéric Perdreau (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne); Anne-Laure Le Nadant (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen); Gérard Cliquet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)
    Abstract: This paper deals with the relationships between plural form and performance in franchising networks in Europe. It is proposed that a franchisor's life cycle stage and human capital assets influence the relationship between plural form and performance. The model has been estimated using panel data on 41 publicly listed European franchising networks in the 1998-2007 period. The proportion of network-franchised units to the total number of its units in its distribution system is used as the indicator of its plural form (franchise proportion). Following an instrumental approach, the network performance is measured at the franchisor level by its industry-adjusted Return on Assets (ROA) and a relative stock market valuation measure of intangible human capital is used. The early results show that the impact of franchise proportion on performance is greater for franchisors with high intangible human capital compared to franchisors with low intangible human capital. Overall, results provide support for the contention that the franchisors' performance is contingent on the ‘fit' between governance structure (franchise proportion) and resources (critical human assets). In contrast, strong evidence that the governance/performance relationship is contingent on life cycle stage or franchisor's age is not found. But, our results suggest that franchisor's age could weaken the relationship between franchise proportion and performance. These results might suggest that younger franchisors with high human capital should increase their franchise proportion to enhance their financial performance.
    Keywords: franchising; human capital; governance; performance
    Date: 2010–11
  12. By: Chae, ChangKyun; Chung, Jaeho
    Abstract: The Korean vocational education and training (VET) system is heralded as one of the key factors contributing to the countries past economic growth. VET has played an important role in developing a skilled labor force during Korea's economic development. However, with the increasing importance of higher education and general education, the status of VET in the country is declining. This paper explores recent Korean data to analyze the labor market outcomes of pre-employment VET institutions. The findings show that current vocational high school education is not associated with better labor market outcomes, in terms of employment rate, wage levels, prospect of permanent employment, and transition to the first job, when compared to general high school education. Among VET programs, the authors find that graduates of higher level, more comprehensive VET programs experience greater labor market achievements than graduates of less competitive, shorter programs. The authors also find that the VET institutes play an important role in supplying technical labor to small and medium enterprises (SMEs).
    Keywords: Tertiary Education,Secondary Education,Labor Markets,Education For All,Teaching and Learning
    Date: 2009–11–01
  13. By: Fredrik Andersson; Elizabeth E. Davis; Matthew L. Freedman; Julia I. Lane; Brian P. McCall; L. Kristin Sandusky
    Abstract: This paper uses matched employer-employee data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in wage inequality within and across industries between 1992 and 2003. We find that the entry and exit of firms and the sorting of workers and firms based on underlying worker skills are important sources of changes in earnings distributions over time. Our results suggest that the underlying dynamics driving changes in earnings inequality are complex and are due to factors that cannot be measured in standard cross-sectional data.
    Keywords: Inequality, Decomposition, Human Capital, Reallocation
    JEL: C23 J24 J31 J48 J63
    Date: 2010–09
  14. By: Gasper, D.R.; George, S.
    Abstract: Various studies suggest that major changes are required in predominant human values during the next two generations, to ensure politically and environmentally sustainable societies and a sustainable global order: away from consumerism to a focus on quality of life; away from a certain type of possessive individualism, towards more human solidarity; and away from an assumption of domination of nature, towards a greater ecological sensitivity. The paper reviews evidence on the scale of these challenges. Second, it analyses their implications and the possibilities of change at personal, societal and global levels, with special reference to education and the respective roles and mutual entanglement of personal change and system change. Thirdly, it discusses possible lessons and contributions of internationally oriented postgraduate education, drawing some suggestions from experience in the International Institute of Social Studies in The Hague.
    Keywords: global sustainability;‘The great transition’;value change;quality of life;cosmopolitanism;education for sustainability;international education
    Date: 2010–06–02
  15. By: Heiwai Tang
    Abstract: This paper studies how cross-country differences in labor market institutions shape the pattern of international trade, focusing on workers' skill acquisition. I develop a model in which workers undertake non-contractible activities to acquire firm-specific skills on the job. In the model, workers have more incentive to acquire firm-specific skills relative to general skills in a more protective labor market. When sectors are different in the dependence on these two types of skills, workers' skill acquisition turns labor laws into a source of comparative advantage. By embedding the model in an open-economy framework with heterogeneous firms, sectors with different levels of dependece on firm-specific skills, and countries with varying degrees of labor protection, I show that countries with more protective labor laws export relatively more in firm-specific, skill-intensive sectors through both the intensive and extensive margins of trade. I then estimate returns to firm tenure for different U.S. manufacturing sectors over the period of 1974-1993, and use the estimates as sector proxies for firm-specific skill intensity to test the theoretical predictions. By implementing the Helpman-Melitz-Rubeinstein (2008) framework to estimate sector-level gravity equations for 84 countries in 1995, I find supporting evidence for the predicted effects of labor market institutions on both margins of trade.
    Keywords: Labor market institutions, heterogeneous firms, margins of trade, trade patterns, firm-specific skills
    JEL: F10 F12 F14 F16 L22 J24
    Date: 2010
  16. By: Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich); Simone Tuor (Institute for Strategy and Business Economics, University of Zurich); Daniela Wettstein (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: This paper examines whether individuals who become either entrepreneurs or employees follow sys-tematically different educational paths to a given educational level. Following Lazear’s jack-of-all-trades theory, we expect that entrepreneurs aim at a balanced set of different skills (academic or voca-tional), while employees specialize in one skill. This means that entrepreneurs follow educational paths that combine different types of education, while employees follow same-type paths while climb-ing up the educational ladder. We use the Swiss Labor Force Survey to test our hypothesis. Our em-pirical findings are in line with Lazear’s theory. Individuals who change between different types of education are more likely to become entrepreneurs. Thus, the permeability of a national educational system is one crucial determinant for entrepreneurship.
    Keywords: Entrepreneurship, Jack-of-all-trades, Educational paths
    JEL: I21 J24 M50
    Date: 2010–10

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