nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒11‒13
thirteen papers chosen by
Fabio Sabatini

  1. Human Capital, Labour Productivity and Employment By Savita Bhat; N S Siddharthan
  2. The role of social trust in reducing long-term truancy and forming human capital in Japan By Yamamura, Eiji
  3. Human Capital and Manufacturing Productivity Growth in India By Vinish Kathuria
  4. The heterogeneous effects of training incidence and duration on labor market transitions By Fitzenberger, Bernd; Osikominu, Aderonke; Paul, Marie
  5. The Protestant Ethic and Work: Micro Evidence from Contemporary Germany By Spenkuch, Jörg L.
  6. Designing the Inequality-Adjusted Human Development Index (IHDI) By Sabina Alkire; James Foster
  7. Maximizing Human Development By Merwan Engineer; Ian King
  8. The Political Economy of Human Development By Robin Harding; Leonard Wantchekon
  9. From centrally planned development to human development By Andrey Ivanov; Mihail Peleah
  10. Which personnel measures are effective in increasing productivity of old workers? By Göbel, Christian; Zwick, Thomas
  11. Human Development in the Middle East and North Africa By Djavad Salehi-Isfahani
  12. Efficiency in human development: A Data Envelopment Analysis By Valérie Vierstraete
  13. How Much Do Educational Outcomes Matter in OECD Countries? By Eric A. Hanushek; Ludger Woessmann

  1. By: Savita Bhat; N S Siddharthan
    Abstract: This paper analyses the importance of human capital in determining the inter-state differences in labour productivity and its growth in India. The paper also examines the impact of human capital differences on the growth of employment for a cross section of Indian states for the period 2003- 2007. It argues that the current technology is human capital and knowledge intensive and cannot be used in the absence of skill development. Due to the presence of skill bias in the new technology, persons with less education would become victims. The panel model results of Generalised Least Squares using cross section weights show that after controlling for other determinants, variables representing human capital emerge significant determinants of productivity. Furthermore, higher enrolments in high schools not only contribute to higher labour productivity but also to higher growth in productivity. In addition, states that have higher high school enrolment rates have been enjoying higher growth rates of employment. On the whole the results presented show strong skill bias in productivity and employment growths across states.
    Keywords: human capital, skill development, technology, education, high school enrollments, productivity, Economics, Labour Economics
    Date: 2010
  2. 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.
    Keywords: human capital; educational economics; economic impact
    JEL: I21 Z13
    Date: 2010–11–01
  3. By: Vinish Kathuria
    Abstract: Empirical studies on total factor productivity growth (TFPG) in developing countries highlight trade openness, research and development and market structure as being the most important determinants of TFPG. The role of human capital remains overlooked in the literature on the determinants of TFPG of Indian manufacturing sector. In this paper, we look into the role of human capital formation as proxied by literacy rate in influencing TFPG, using Indian manufacturing as a case-study. To compute TFPG, we use firm level data for both the formal and informal manufacturing sector. We correct for the simultaneity bias associated with the production function approach for TFPG estimation by employing a method recently developed by Levinsohn and Petrin. We compute period-average adult literacy rate for 15 Indian States over the period 1994-2005, and then use them in TFP growth equations to estimate the effect of literacy on TFPG. The results indicate that literacy has positively affected the TFP growth of Indian industry. The effect however is primarily for the formal sector.
    Keywords: literacy rate, TFP, TFP, manufacturing, industrial economics, Economics, state-business Relation, Productivity growth, Formal sector, Informal sector, Levinsohn-Petrin method,
    Date: 2010
  4. By: Fitzenberger, Bernd; Osikominu, Aderonke; Paul, Marie
    Abstract: This paper estimates the impact of training incidence and duration on employment transitions accounting for the endogeneity of program participation and duration. We specify a very flexible bivariate random effects probit model for employment and training participation and we use Bayesian Markov Chain Monte Carlo (MCMC) techniques for estimation. We develop a simulation approach that uses the estimated coefficients and individual specific effects from the MCMC iterations to calculate the posterior distributions of different treatment effects of interest. Our estimation results imply positive effects of training on the employment probability of the treated, lying between 12 and 21 percentage points ten quarters after program start. The effects are higher for women than for men and higher in West Germany than in East Germany. Further, we find that the effect of training versus waiting underestimates the effect of training versus no training in the medium and long run by a third. Finally, our results show that longer planned enrolment lengths of three and four quarters as opposed to just two quarters lead to an increase in employment rates in the medium and long run by four to eleven percentage points. --
    Keywords: evaluation,active labor market programs,dynamic non-linear panel data models,MCMC
    JEL: J68 C33 C11
    Date: 2010
  5. By: Spenkuch, Jörg L.
    Abstract: Few theories in the social sciences have gained more widespread acceptance than Max Weber’s The Protestant Ethic and the Spirit of Capitalism—despite a lack of conclusive empirical evidence. At the core of Weber’s theory lies a connection between Protestantism and attitudes toward work. Using micro-data from contemporary Germany, this paper investigates the impact of Protestantism on economic outcomes and whether any such connection still exists. To break the endogeneity in religious affiliation the paper exploits the fact that the geographic distribution of Catholics and Protestants is an artifact of a provision in the Peace of Augsburg in 1555. Reduced form and instrumental variable estimates indicate that, even today, Protestantism leads to higher earnings through increased hours of work, and substantially more self-employment. Institutional factors, or differences in human capital acquisition cannot account for this effect. Instead, the data point to an explanation based on individual values akin to a Protestant Ethic.
    Keywords: religion; economic effects of religion; Protestantism; impact of Protestantism; Reformation
    JEL: Z12 N3 J0
    Date: 2010–11–04
  6. By: Sabina Alkire (Oxford Poverty and Human Development Initiative at Oxford University); James Foster (George Washington University and Oxford Poverty & Human Development Initiative)
    Abstract: As a measure of wellbeing, national income misses variations in the things income can and cannot buy. It also misses variations in people’s claim on that aggregate income. The Human Development Index attempts to address the first weakness by incorporating two additional dimensions, health and education, into its informational bases. However, the second weakness, inequality, is ignored by the traditional HDI. In practical terms this means that any two countries having the same mean achievements will have the same HDI values even if they have very different distributions of achievements. This calls into question the accuracy of the HDI as a reflection of people’s actual achievements. This paper proposes a method for adjusting the HDI to reflect the distribution of human development achievements across the population, and across dimensions. We begin with a discussion of the proposed indices in an idealized setting where variables and their scales have been identified and the data are available. We then address the practical issues that must be addressed when applying these methods to real data. The final section presents and evaluates another related approach.
    Keywords: Human Development Index, inequality, multidimensional inequality measurement, capability approach, multidimensional welfare.
    JEL: I0 D63 O15 I3
    Date: 2010–10
  7. By: Merwan Engineer; Ian King
    Abstract: The Human Development Index (HDI) is widely used as an aggregate measure of overall human well being. We examine the allocations implied by the maximization of this index, using a standard growth model — an extended version of Mankiw, Romer, andWeil’s (1992) model — and compare these with the allocations implied by the golden rule in that model. We find that maximization of the HDI leads to the overaccumulation of both physical and human capital, relative to the golden rule, and consumption is pushed to minimal levels. We then propose an alternative specification of the HDI, which replaces its income component with a consumption component. Maximization of this modified HDI yields a “human development golden rule” which balances consumption, education and health expenditures, and avoids the more extreme implications of the existing HDI.
    Keywords: Economic growth, Human Development Index, Planning
    Date: 2010
  8. By: Robin Harding (New York University); Leonard Wantchekon (New York University)
    Abstract: What are the causes and consequences of human development? In the twenty years since the publication of the first Human Development Report (HDR), political scientists have invested a great deal of time and effort into answering this question. So what do we know? In this paper we seek to review these labors, the fruits of which can be summarized as follows. Democracy causes, but is not caused by, economic development. While total economic growth is no higher as a result of democratic institutions, they are more conducive than non-democratic alternatives to the growth of per capita income, which is an important aspect of individual well-being. Democratic institutions are also conducive to improvements in the two other essential elements of human development, longevity and knowledge - democracy has a positive effect on indicators of education and health. Given these findings, it seems pertinent to ask why democracy has such effects. Our conclusion from the literature is that the positive impact of democratic institutions stems from their provision of accountability structures. But in providing these structures, what democracy offers is the opportunity for human development. It is no guarantee of its realization, and in the absence of factors such as information and participation this opportunity can be missed.
    Keywords: Human Development, Democracy, Political Institutions, Accountability, Income, Education, Health.
    JEL: I00 O11 O12
    Date: 2010–10
  9. By: Andrey Ivanov (UNDP Bratislava Regional Centre); Mihail Peleah (UNDP Bratislava Regional Centre)
    Abstract: This paper examines the links between human development concept and the attempt to implement the communist project in the countries of the former socialist bloc. It argues that the human development performance of the socialist system, despite its beneficial outcome for the ‘working masses’, had little in common with actual human development. It met basic needs in education, health, and living standards. Under the socialist system development approaches were missing two major components of human development – freedom and agency. In this sense an emerging sense of agency in societies in the region is the major transformation outcome. The departure from centrally planned and state-dominated model of development was painful, expensive and took long time. In some countries it is still in process with uneven progress and moments of reverse. But the overall trend is clear and policies that encourage people someone to take responsibility, act and bring about change for improving their own welfare are the best long-term investment in human development opportunities. Still, major questions remain unanswered. The first is to what extent the current – market-based, consumer demand oriented – system is capable of going beyond those basic needs and combine economic growth with other human development dimensions? Has it already gone into the opposite extreme to that of the former communist utopia attempt – subordinating human development to consumer demand driven consumption? Answering these questions goes beyond the scope of the current paper but the socialist countries’ experience could perhaps provide some insights for the answers.
    Keywords: human development, basic needs, Europe, Central Europe, Eastern Europe, Central Asia, USSR, CIS, transitional economies, freedom, agency.
    JEL: P36 N30 O15 O52 P20
    Date: 2010–10
  10. By: Göbel, Christian; Zwick, Thomas
    Abstract: In this study, we investigate the effect of five specific human resource measures for old employees (SMOE) on their relative productivity. Despite the fact that SMOE are applied in the majority of establishments, this is the first representative study on the effectiveness of these measures. We find that the relative productivity contributions of old workers are significantly higher in establishments that provide either specific equipment of work places or age-specific jobs for old workers. In establishments that apply mixed-age working teams the productivity contributions of old and of young employees are significantly higher than in establishments without this measure. Working time reductions and specific training for old employees are not associated with higher relative productivity of these employees. Our paper provides a joint explanation for two recent findings, the only modest decline of the productivity contributions of old workers and the high variance for estimates of age-productivity profiles. --
    Keywords: ageing workforce,age-productivity-profile,personnel management,HRM
    JEL: J11 J14 J21
    Date: 2010
  11. By: Djavad Salehi-Isfahani (Virginia Tech and Brookings Institution)
    Abstract: Middle East and North African countries (MENA) have achieved much to be proud of in human development. Falling child mortality and fertility have transformed family structures in most MENA countries. Despite important advances in health, education, and income, there are certain aspects human development in which MENA countries have not progressed as far. There are inequalities in human development regionally, within each country and for specific demographic groups, most importantly for youth and women. In this paper I review the record of human development in the MENA region to highlight areas in which the region has been more successful, as well those in which human development has lagged in absolute terms or relative to economic growth. I draw attention to certain important characteristics of the region that distinguish it from other developing regions, in particular the presence of oil income and delayed demographic transition.
    Keywords: Human development, Middle East and North Africa, Youth.
    JEL: O15 N35 J13 J16 J21 J24
    Date: 2010–10
  12. By: Valérie Vierstraete (GREDI, Department of Economics, Université de Sherbrooke)
    Abstract: The human development index (HDI) is a measure of development published annually by the UNDP. This index allows countries’ development to be assessed on the basis of three indicators that measure the health, education, and standard of living of the population. The UNDP also computes a human development that excludes this last indicator, the HDI*. The global average of the HDI is approximately 0.75, but like the HDI*, it presents some striking inter-country disparities. In this study, we wish to demonstrate that efficiency in the utilization of public resources can have an incidence on HDI* scores. Thus, owing to a certain “waste” in their use of resources, countries with similar levels of government spending may end up with differing levels of human development. We measure this efficiency using the Data Envelopment Analysis (DEA) method. Relative efficiency in resource use is thus computed by comparing the countries in the study amongst themselves.
    Keywords: Data Envelopment Analysis, DEA, efficiency, development, human development index, HDI
    JEL: O15 O57
    Date: 2010–10–12
  13. By: Eric A. Hanushek; Ludger Woessmann
    Abstract: Existing growth research provides little explanation for the very large differences in long-run growth performance across OECD countries. We show that cognitive skills can account for growth differences within the OECD, whereas a range of economic institutions and quantitative measures of tertiary education cannot. Under the growth model estimates and plausible projection parameters, school improvements falling within currently observed performance levels yield very large gains. The present value of OECD aggregate gains through 2090 could be as much as $275 trillion, or 13.8 percent of the discounted value of future GDP. Extensive sensitivity analyses indicate that, while differences between model frameworks and alternative parameter choices make a difference, the economic impact of improved educational outcomes remains enormous. Interestingly, the quantitative difference between an endogenous and neoclassical model framework – with improved skills affecting the long-run growth rate versus just the steady-state income level – matters less than academic discussions suggest. We close by discussing evidence on which education policy reforms may be able to bring about the simulated improvements in educational outcomes.
    JEL: H0 I2 J24 J48 O4
    Date: 2010–11

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