nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒07‒05
seven papers chosen by
Tommaso Reggiani
University of Cologne

  1. A Human Capital Theory of Economic Growth: New Evidence for an Old Idea By Theodore R. Breton
  2. Who Should We Ask? Employer and Employee Perceptions of Skill Gaps within Firms By McGuinness, Seamus; Ortiz, Luis
  3. Skill Development and Regional Mobility: Lessons from the Australia-Pacific Technical College - Working Paper 370 By Michael Clemens, Colum Graham, and Stephen Howes
  4. Equilibrium and Optimal Fertility with Increasing Returns to Population and Endogenous Fertility By Cuberes, David; Tamura, Robert
  5. Single- and Double-Elimination All-Pay Tournaments By Cary Deck; Erik O. Kimbrough
  6. Monitoring and efficiency wage versus profit sharing in a revolutionary context By Amal Hili
  7. Higher Test Scores or More Schooling? Another Look at the Causes of Economic Growth By Theodore R. Breton

  1. By: Theodore R. Breton
    Abstract: In 1960 Theodore Schultz expounded a human capital theory of economic growth that includes three elements: 1) Countries without much human capital cannot manage physical capital effectively, 2) Economic growth can only proceed if physical capital and human capital rise together, and 3) Human capital is the factor most likely to limit growth. I specify Schultz’s theory mathematically and test it in periods when global financial capital was highly mobile. I find that in 1870, 1910, and 2000, the average schooling attainment of the adult population largely determined the stock of physical capital/capita and GDP/capita in 42 market economies.
    Keywords: Human Capital, Schooling, Capital Investment, Economic Growth, Solow Model, Market Economies
    JEL: E13 I21 O11 O15 O41
    Date: 2014–01–01
  2. By: McGuinness, Seamus; Ortiz, Luis
    Abstract: Using the employer-employee matched National Employment Survey of Ireland carried out in 2006, this paper compares the skill gaps as perceived by managers and employees located within the same firm. The paper looks at the main drivers of agreement/disagreement on the perception of skill gaps and considers the extent to which the way of measuring these gaps helps to explain outcome variables such as labour costs and training expenditures. The research finds that both human resource management processes and collective bargaining arrangements are important factors in facilitating agreement of training needs. Skill gaps were found to increase average training costs and average labour costs. Finally, the evidence suggests that employee perceptions of skill gaps may be prone to higher levels of subjective bias.
    Date: 2014–05
  3. By: Michael Clemens, Colum Graham, and Stephen Howes
    Abstract: Developing countries invest in training skilled workers and can lose part of their investment if those workers emigrate. One response is for the destination countries to design ways to participate in financing skilled emigrants’ training before they migrate—linking skill creation and skill mobility. Such designs can learn from the experience of the Australian-aid-funded Australia-Pacific Technical College (APTC). The APTC is financing and conducting vocational training in five Pacific island developing countries for thousands of workers with the objective of providing them with opportunities to find employment at home and abroad—including in Australia. With thousands of graduates across the region the APTC has attained its goal of skill creation, but has not attained its goal of skill mobility. This paper establishes and explains this finding, and draws lessons for future initiatives that may seek to link skill creation with higher levels of skill mobility.
    Keywords: skill, education, labor, training, human capital, migration, brain drain, Australia, pacific, mobility
    JEL: F22 J24 O15 R23
    Date: 2014–06
  4. By: Cuberes, David; Tamura, Robert
    Abstract: We present a general equilibrium dynamic model that characterizes the gap between optimal and equilibrium fertility and investment in human capital. In the model, the aggregate production function exhibits increasing returns to population arising from specialization but households face the standard quantity-quality trade-off when deciding how many children they have and how much education these children receive. In the benchmark model, we solve for the equilibrium and optimal levels of fertility and investment per child and show that competitive fertility is too low and investment per child too high. We next introduce mortality of young adults in the model and assume that households have a precautionary demand for children. Human capital investment raises the likelihood that a child survives to the next generation. In this setup, the model endogenously generates a demographic transition but, since households do not internalize the positive effects of a larger population on productivity and the negative effects of human capital on mortality, both the industrial revolution and the demographic transition take place much later than it would have been optimal. Our model can be interpreted as a bridge between the literature on endogenous demographic transitions and papers that study welfare issues associated with fertility and human capital decisions.
    Keywords: increasing returns to population, endogenous fertility, endogenous mortality
    JEL: J1 J24 O1
    Date: 2014–07–02
  5. By: Cary Deck (Department of Economics, University of Arkansas and Economic Science Institute, Chapman University); Erik O. Kimbrough (Department of Economics, Simon Fraser University)
    Abstract: Tournaments consisting of iterative matches are a common mechanism for determining how to allocate a prize. While participants are focused on their own outcomes, tournament organizers often have objectives such as maximizing the total investment or effort by the participants over the course of the tournament. For this reason it is important for organizers to understand the behavioral as well as the theoretical properties of different tournament structures. Given that laboratory experiments have consistently found high levels of overbidding in contests, one might suspect that double-elimination tournaments would generate substantially more total investment than single-elimination tournaments despite the two types of tournaments generating theoretically equivalent expected aggregate investment. This paper reports a set of laboratory experiments designed to test this comparison. The results indicate that aggregate investment is similar between the two tournaments. While observed behavior in the single-elimination tournament is quite similar to theoretical predictions, behavior in the double-elimination tournament appears to be impacted by an implicit, self-imposed budget constraint.
    Keywords: elimination tournaments, all-pay auctions, experiments
    JEL: C7 C9 D4 D7
    Date: 2014
  6. By: Amal Hili (ISG-Sousse, EPEE-Universit´e d’Evry, Association MASE-ESSAI)
    Abstract: We propose to study the trade off between two incentive strategies (moni- toring and efficiency wage versus profit sharing), operated by one firm to induce more efforts among employees. We deal first with a normal context where shirkers bear the risk to be fired. We consider second a particular revolutionary context where employees, even when they go on infinite strikes, would not be dismissed as inspired by the tunisian revolution and more precisely by social movements and general strikes occurring among tunisian workers after revolution. We prove, in the first context, that the profit share to be distributed at equilibrium is pos- itive and depending on the monitoring strategy. In this first context, the two strategies are shown to be strategic complements for low values of risk aversion and strategic substitutes for high ones. We show in the second framework, the emergence of a particular case where the capital holder increases the profit share distributed to employees relative to the one in the first context. This equilibrium profit share is proven to be independent of the monitoring strategy.
    Keywords: monitoring, efficiency wage, profit sharing, strikes, risk aversion
    JEL: J41 J52
    Date: 2014
  7. By: Theodore R. Breton
    Abstract: I use a dynamic augmented Solow model to estimate the effects of students’ test scores and investment in schooling on economic growth rates in 49 countries during 1985-2005. In the complete data set, either average test scores or investment in schooling explain economic growth rates, and more of either causes growth. Further analysis reveals that higher test scores only raised growth rates in countries with low average levels of schooling. In countries with more than 7.5 years of schooling attainment in 1985, more investment in schooling raised growth rates, but higher average test scores did not.
    Keywords: Education Expenditures; Human Capital; Test Scores; Economic Growth
    JEL: O41 I25
    Date: 2013–11–05

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