nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2010‒12‒18
fourteen papers chosen by
Fabio Sabatini

  1. Employers Size Wage Differential: Does Investment in Human Capital Matter? By Nasir, Zafar Mueen; Iqbal, Nasir
  2. Wage formation and gender wage gaps: The changing role of human capital in the Finnish technology industry By Rita Asplund; Reija Lilja
  3. The Contribution of Human Capital to China’s Economic Growth By John Whalley; Xiliang Zhao
  4. Why do low-educated workers invest less in further training? By Fouarge Didier; Grip Andries de; Schils Trudie
  5. Immigrant Over- and Under-education: The Role of Home Country Labour Market Experience By matloob Piracha; Massimiliano Tani; Florin Vadean
  6. The Underground Economy in a Matching Model of Endogenous Growth By Gaetano Lisi; Maurizio Pugno
  7. The impact of labor market entry conditions on initial job assignment, human capital accumulation, and wages By Beatrice Brunner; Andreas Kuhn
  8. Testing the growth effects of structural change By Jochen Hartwig
  9. Sustainability and the Measurement of Wealth By Kenneth J. Arrow; Partha Dasgupta; Lawrence H. Goulder; Kevin J. Mumford; Kirsten Oleson
  10. The Causal Eff ect of Parent’s Schooling on Children’s Schooling By Holmlund, Helena; Lindahl, Mikael; Plug, Erik
  11. Female Labour Supply and Spousal Education By Papps, Kerry L.
  12. Entrepreneurship education in Italian universities: trend, situation and opportunities By Donato Iacobucci; Alessandra Micozzi
  13. (Non)persistent effects of fertility on female labour supply By Concetta Rondinelli; Roberta Zizza
  14. Gender at Work: Productivity and Incentives By Migheli, Matteo

  1. By: Nasir, Zafar Mueen; Iqbal, Nasir
    Abstract: Wage differential due to employer size is one of the key areas of interest in labor market research because a strong positive relationship between employer size and wages has been observed in developed and developing countries. It is, however, relatively neglected area of research in Pakistan. The purpose of present study is to investigate the employer size wage differential by looking at human capital factors. The study is based on standard methodology and estimates earning functions on Labor Force Survey (LFS) data for year 2007-08. Results clearly show that human capital investment has a bigger role in determining wages in the larger firms as compared to smaller firms. The main policy implications emanating from the analysis are the higher investment in skill which increases opportunities for workers in the labor market for higher wages and for jobs with good characteristics especially in large sized firms. The government policy towards education and skill formation needs serious reforms and better allocation of funds so that people get chance to enhance their skill level hence wages
    Keywords: Employers Size; Wage Differential; Human Capital
    JEL: J31 J41 J24
    Date: 2010–05–22
  2. By: Rita Asplund; Reija Lilja
    Abstract: Both academia and policymakers express a strong belief in higher average education levels exerting a narrowing impact on wage inequality in general and gender wage gaps in particular. The present paper scrutinizes whether or not this effect extends to R&D- and export-intensive branches such as the technology industry. The answer seems to be a cautious ‘no’. Indeed, while changes in standard human capital endowments can explain little, if anything, of the growth in real wages or the widening of wage dispersion among the Finnish technology industry’s white-collar workers, a new job task evaluation scheme introduced in 2002 seems to have succeeded, at least in part, to make the wage-setting process more transparent by re-allocating especially the industry’s female white-collar workers in a way that better reflects their skills, efforts and responsibilities. One crucial implication of this finding is that improving the standard human capital of women closer to that of men will not suffice to narrow the gender wage gap in the advanced parts of the economy and, hence, not also the overall gender wage gap. The reason is obvi-ous : concomitant with rising average education levels, other skill aspects have received increasing attention in working life. Consequently, a conscious combination of formal and informal competencies as laid down in well-designed job task evaluation schemes may, in many instances, offer a more powerful path to tackling the gender wage gap.
    Keywords: decomposition, gender wage gap, human capital, job task evaluation, technology industry, wage formation
    JEL: J16 J31
    Date: 2010–12–07
  3. By: John Whalley; Xiliang Zhao
    Abstract: This paper develops a human capital measure in the sense of Schultz (1960) and then reevaluates the contribution of human capital to China’s economic growth. The results indicate that human capital plays a much more important role in China’s economic growth than available literature suggests, 38.1% of economic growth over 1978-2008, and even higher for 1999-2008. In addition, because human capital formation accelerated following the major educational expansion increases after 1999 (college enrollment in China increased nearly fivefold between 1997 and 2007) while growth rates of GDP are little changed over the period after 1999, total factor productivity increases fall if human capital is used in growth accounting as we suggest. TFP, by our calculations, contributes 16.92% of growth between 1978 and 2008, but this contribution is -7.03% between 1999 and 2008. Negative TFP growth along with the high contribution of physical and human capital to economic growth seem to suggest that there have been decreased in the efficiency of inputs usage in China or worsened misallocation of physical and human capital in recent years. These results underscore the importance of efficient use of human capital, as well as the volume of human capital creation, in China’s growth strategy.
    JEL: O0 O10 O4 O47
    Date: 2010–12
  4. By: Fouarge Didier; Grip Andries de; Schils Trudie (METEOR)
    Abstract: Several studies document the fact that low-educated workers participate less often infurther training than high-educated workers. The economic literature suggests that there is no significant difference in employer willingness to train low-educated workers, which leaves the question of why the low educated invest less in training unanswered. This paper investigates two possible explanations: Low-educated workers invest less in training because of 1) the lower economic returns to these investments or 2) their lower willingness to participate in training. Controlling for unobserved heterogeneity that can affect the probability of enrolling into training, we find that the economic returns to training for low-educated workers are positive and not significantly different from those for high-educated workers. However, loweducated workers are significantly less willing to participate in training. This lesser willingness to participate in training is driven by economic preferences (future orientation, preference for leisure), as well as personality traits (locus of control, exam anxiety, and openness to experience).
    Keywords: labour economics ;
    Date: 2010
  5. By: matloob Piracha (University of Kent and IZA); Massimiliano Tani (Macquarie University and IZA); Florin Vadean (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: The cause of immigrant education mismatch in the host country labour market might not necessarily be discrimination or imperfect transferability of human capital, as argued in previous studies. Immigrants who have gained professional experience in the home country in jobs below their education level might be assessed by host country employers as having lower abilities and skills than those expected from their educational qualifications. Using the Longitudinal Survey of Immigrants to Australia we show that a significant part of the variation in the immigrants’ probability to be over-/under-educated in the Australian labour market can be explained by having been over-/under-educated in the last job in the home country.
    Keywords: immigration, education-occupation mismatch, sample selection
    JEL: C34 J24 J61
    Date: 2010–12–09
  6. By: Gaetano Lisi (University of Cassino); Maurizio Pugno (University of Cassino)
    Abstract: A matching model will explain both unemployment and economic growth by considering the underground sector. Three problems can thus be simultaneously accounted for: (i) the persistence of underground economy, (ii) the ambiguous relationships between underground employment and unemployment, and (iii) between growth and unemployment. The key assumptions adopted are that entrepreneurial ability is heterogeneous across individuals; skill accumulation determines productivity growth in the regular sector and a positive externality on the underground sector; job-seekers choose whether or not to invest in education and skill depending on the expected wages in the two sectors. The conclusions are that the least able entrepreneurs set up underground firms, employ unskilled labour, and do not contribute to growth. Underground employment alleviates unemployment only if the monitoring rate is sufficiently low. Policies for entrepreneurship and monitoring would help both economic growth and employment.
    Keywords: entrepreneurship, underground economy, shadow economy, unemployment, human capital, endogenous growth, search and matching models
    JEL: E26 J23 J24 J63 J64 L26 O40
    Date: 2010–12–12
  7. By: Beatrice Brunner; Andreas Kuhn
    Abstract: We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages as well as a sizeable negative long-run effect. Specifically, we estimate that a one percentage point increase in the initial local unemployment rate is associated with an approximate shortfall in lifetime earnings of 6.5%. We also show that bad entry conditions are associated with lower quality of a worker's first job and that initial wage shortfalls associated with bad entry conditions only partially evaporate upon involuntary job change. These and additional findings support the view that initial job assignment, in combination with accumulation of occupation or industry-specific human capital while on this first job, plays a key role in generating the observed wage persistencies.
    Keywords: Initial labor market conditions, endogenous labor market entry, initial job assignment, specific human capital
    JEL: E3 J2 J3 J6 M5
    Date: 2010–12
  8. By: Jochen Hartwig (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Against the backdrop of Baumol’s model of ‘unbalanced growth’, a recent strand of literature has presented models that manage to reconcile structural change with Kaldor’s ‘stylized fact’ of the relative constancy of per-capita GDP growth. Another strand of literature goes beyond this, arguing that the expenditure shifts toward Baumol’s ‘stagnant’ sector stimulate rather than dampen long-term economic growth because of the human capital-accumulating nature of major ‘stagnant’ services (like health care and education). This paper tests the relationship between structural change and economic growth empirically by means of a Granger-causality analysis of a panel of 18 OECD countries.
    Keywords: Economic growth, structural change, human capital, Panel Granger-causality tests
    JEL: C12 C23 I10 I20 J24 O41
    Date: 2010–09
  9. By: Kenneth J. Arrow; Partha Dasgupta; Lawrence H. Goulder; Kevin J. Mumford; Kirsten Oleson
    Abstract: We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth – one that accounts for natural capital and human capital as well as reproducible capital – is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant reductions in the natural resource base. We find that the value of “health capital” is very large relative to other forms of capital. As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.
    JEL: D69 O10 O47 O50 Q32 Q39
    Date: 2010–12
  10. By: Holmlund, Helena (Swedish Institute for Social Research,); Lindahl, Mikael (Uppsala Center for Labor Studies); Plug, Erik (Uppsala Center for Labor Studies)
    Abstract: We review the empirical literature that estimates the causal effect of parent’s schooling on child’s schooling, and conclude that estimates differ across studies. We then consider three explanations for why this is: (a) idiosyncratic differences in data sets; (b) differences in remaining biases between different identification strategies; and (c) differences across identification strategies in their ability to make out-of-sample predictions. We conclude that discrepancies in past studies can be explained by violations of identifying assumptions. Our reading of past evidence, together with an application to Swedish register data, suggests that intergenerational schooling associations are largely driven by selection. Parental schooling constitutes a large part of the parental nurture effect, but as a whole does not play a large role.
    Keywords: intergenerational mobility; education; causation; selection; identification
    JEL: C13 I21 J62
    Date: 2010–05–31
  11. By: Papps, Kerry L. (University of Oxford)
    Abstract: Three hypotheses are given to explain why a married woman's work hours might be related to her husband's education, even controlling for his wage rate. Data for a single cohort of women from the NLSY 1979 suggest that women's work hours are positively related to spousal education at the time of marriage but also fall more rapidly over time after marriage among those with the most educated husbands. Cross-sectional data from the CPS for 1980-2010 indicate that the latter effect appears to have increased since 2000. Both men's and women's preferences for a traditional division of labour within the household are found to be negatively related to the husband’s education among newlyweds but to rise faster over the course of a marriage when the husband is highly educated. Overall, the results provide evidence consistent with both marital sorting on the basis of attitudes to female work and changes in tastes that are influenced by marital quality. Little support is found for the argument that spousal education measures non-market productivity.
    Keywords: labour supply, households, education
    JEL: J16 J22 J24
    Date: 2010–11
  12. By: Donato Iacobucci (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche); Alessandra Micozzi (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche)
    Abstract: The aim of this paper is to provide an analysis of the present situation and recent evolution in entrepreneurship courses and curricula in Italian universities. The analysis is based on a census of entrepreneurship courses and curricula run by Italian universities in 2004 and 2010. Entrepreneurship education in Italian universities is in its early development. Up to 2004 only a few universities had courses dedicated to entrepreneurship and the majority of them dealt with the development of the business plan. This situation has only slightly improved in the following years. Courses and curricula are mostly within business schools while very few exist in engineering and science schools. This situation contrasts with the need for entrepreneurship education in the Italian economy. Given the importance of traditional sectors in Italian industry we need to stimulate start-up in high-tech sectors: the development of entrepreneurship courses in engineering and in other science curricula could play an important role in this sense. At the same time we need to favor the growth process of small firms; this requires people who are able to play an entrepreneurial role in established firms.
    Keywords: entrepreneurship education, university courses, intrapreneurship, entrepreneurial competences.
    Date: 2010–11
  13. By: Concetta Rondinelli (Bank of Italy); Roberta Zizza (Bank of Italy)
    Abstract: The negative association between fertility and female labour market participation is complicated by the endogeneity of fertility. We address this problem by using an exogenous variation in family size caused by infertility shocks, mainly related to the fact that nature prevents some women from achieving their desired fertility levels. Despite a widely documented reduction of female labour supply around childbirth, using the Bank of Italy's SHIW we find that this effect dissipates over time, with some clues of penalties related to job quality. Results are confirmed exploiting the Istat Birth Survey, with insights of a different impact according to the age of the child.
    Keywords: participation, children, motherhood, female employment rate, Italy
    JEL: J13 J22 C25
    Date: 2010–12
  14. By: Migheli, Matteo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: This paper analyses the relationship between workers’ gender and monetary incentives in an experimental setting based on a double-tournament scheme. The participants must choose between a piece-rate payment or a performance prize. The results show that women tend to shy away from competition, and are less sensitive than men to the monetary incentives of the tournament. In addition the tournament scheme induces males, but not women, to signal their ability and to select the contract which is more profitable for them.
    Keywords: gender; incentives; work; experiment
    JEL: C91 J16 J41
    Date: 2010–05–18

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