Showing papers on "Human capital published in 1977"

Family Migration Decisions

Abstract: This paper joins a few very recent attempts to analyze migration in the awareness of the family context. In contrast to most of them, my focus is exclusively on the family context. The paper defines family ties relevant to migration decisions and explains their effects on the probability of migration, on consequent changes in employment and earnings of family members, as well as on family integrity itself. Hopefully, the paper provides material for a missing chapter on family economics as well as an addition to the economics of labor supply arid of human capital formation.

Allocative Efficiency: The Role of Human Capital

Abstract: I. Introduction, 59.—II. The model, 62.—III. Empirical analysis, 66.—IV. Further implications, 74.—V. Conclusions, 77.—Appendix: data and sources, 77.

Family Migration Decisions

Abstract: This paper joins a few very recent attempts to analyze migration in the awareness of the family context In contrast to most of them, my focus is exclusively on the family context The paper defines family ties relevant to migration decisions and explains their effects on the probability of migration, on consequent changes in employment and earnings of family members, as well as on family integrity itself Hopefully, the paper provides material for a missing chapter on family economics as well as an addition to the economics of labor supply arid of human capital formation

Adam Smith on Human Capital

Abstract: I shall examine Adam Smith's treatment of human capital under five heads: the optimizing system of natural liberty; the nature of human capital; its sources; its unnecessary costliness; and obstacles to its optimum use. His recourse to cost-utility criteria in assessing educational practice (134) will be touched upon but not his somewhat analytical history of educational practice over the centuries.1 Smith (89, 164) was aware of the past improvement in average income (89), of the elasticity of man's wants (164), and of the impact of the "gradual improvement of arts, manufactures, and commerce" (755). He did not, however, anticipate that income increase might transform educational personnel and facilities into suppliers of consumer-oriented rather than essentially producer-oriented services (164), probably because he was concentrating on then current problems.

Social security and investment in human capital

Abstract: Although several investigators have been concerned with the effect of social security on saving and investment, none have considered its effects on incentives to invest in human capital. This paper...

Education and the income differential: an estimation for Rawalpindi city

Abstract: Empirical tests of the human capital hypothesis-that eduCation increases an individual's income-have been undertaken in several countries with favourable results [131. These results show that (1) income differentials between individuals of different educational levels are wide; (2) the differentials establish shortly after the initial years of work and maintain through the duration of the life cycle; (3) the differentials are greater in developing countries than in developed countries; (4) the returns to education, after allowing for educational costs, exceed the returns to physical capital investment in developing countries; (5) the highest returns are to primary education; and (6) private returns exceed social returns. Which, if not all, of these results are true for Pakistan is not known. This paper yields such comparative results through an application of the human capital hypothesis to Rawalpindi City. The data for Rawalpindi are for males and derive from a socio-economic survey conducted by the Pakistan Institute of Development Economics in 1975.

Policy Decisions and Research in Economics and Industrial Relations.

Abstract: Examines policy problems in manpower programs and explores the relationship among wages, unemployment, and prices. Relation of unemployment and wage inflation; Relation between wages and price standards; Human capital and manpower and education programs. (Abstract copyright EBSCO.)

Schooling as a Wage Depressant

Abstract: We investigate the relationship between current schooling and current wage rates. Casual observation seems to reflect a discontinuity in wage rate growth which occurs when an individual completes school and joins the labor force as a permanent member. This suggests that the time spent in work while attending school is in some sense secondary. Here, the marginal value of the individual's time is considerably lower than the average value of his time. The problem is essentially one of "anti-complementarities" between the production of human capital through formal schooling and working in the primary occupation. More generally, the productivity of an individual's time in one endeavor is not independent of how the rest of his time is spent. If this is the case, students will be willing to accept lower paying jobs which do not greatly diminish the productivity of school time in lieu of jobs offering higher wages at the cost of a greater reduction in school time productivity. The wages of students, other things constant, are about 12% lower than those of non-students. The magnitude of this wage differential is surprisingly large and warrants investigation on empirical grounds alone. This paper explores the empirical relationship and examines various explanations for it. Finally, implications of the analyses are discussed.

The Middle East and the United States: A Problem of “Brain Drain”

Abstract: In explaining the determinants of economic growth, economists have attempted to distinguish the relative contributions made by various inputs. Theodore Schultz concluded that improvements in human capital have made larger contributions to growth than increases in physical capital. E. F. Denison was even more specific in his pioneering studies of changes in real national income in the United States from 1927 to 1967, estimating that 23 percent of the growth could be explained by improvements in the educational level of the labor force and 20 percent by advances in technological and managerial knowledge. On the basis of such results, we may conclude that expenditures on education and training, public health, and general research contribute significantly to productivity in the industrialized nations by raising the quality of human capital; thus these outlays command a continuing return in the future.

Specific training and its effects on the human capital investment profile

Abstract: It is well known that investment in human capital is a mix of general and specific training.1 In the case of general training, the individual's investment raises his marginal product equally in all jobs which results in his paying for the entire investment. Part of an individual's investment in human capital, however, is specific to his 'current job and a fraction of the increase in his productivity that occurs on the current job is therefore not carried with him when he moves to another job. Thus the employer has an incentive to share the costs and returns of specific training with the worker in order to reduce the probability that the worker will quit. Most of the previous work on the human capital investment and earnings profiles has concentrated on the effects of general training and has shown that investment declines continuously over the life cycle due to the existence of a finite retirement age.2 Polachek [10] has shown, however, that this result is

Consumption efficiency and spectator attendance

Abstract: The impact of education on individual behaviour has been analyzed for a broad range of economic activity.(l) One area of research has focused on the relationship between education and efficiency in consumption, or in non-market production activities.(2) Within a human capital framework, it is suggested that education raises the productivity of an individual's time in non-market production activities. More highly educated individuals are expected to be more efficient in gathering and utilizing information relevant to consumption decisions, and in transforming inputs to output in the household production function. They may also be more receptive to the use of new and improved consumer products. Increased efficiency in consumption effectively lowers the prices of commodities "produced" by more highly educated consumers, and thereby increases their real incomes. All other things equal, education should affect consumer behaviour in the same manner as increasing money income, holding prices constant. In fact, since education generally alters an individual's marginal productivity in both market and non-market production activities, the observed relationship between education and consumption could reflect efficiency changes in both market and non-market production (i.e. consumption) activities.(3) Numerous studies of attendance patterns at performing arts events have pointed a positive and significant relationship between an individual's .education level and his or her frequency of performance attendance .(4) While the relationship might reflect a positive association between education and income, there is some evidence that education, holding income constant, has a net positive influence on arts attendance.(5) Indeed, the existence of a causal relationship between education and arts attendance is a fundamental premise held by arts policy-makers. It is, therefore, noteworthy that no significant attempt has been made to develop and test a structural model

The Production of Human Capital Over Time

Abstract: A decade has passed since the passage of the federal Elementary and Secondary Education Act (ESEA) of 1965. Current federal expenditures for compensatory education under that act now exceed $1.5 billion annually. Those expenditures are largely focused on children in the elementary grades, in particular, kindergarten through grade three.' A major objective of compensatory education programs can be viewed as reducing poverty by increasing the human capital stocks of students at the end of their school-lives (i.e., the terminal human capital stock). Proponents of early childhood intervention programs expect terminal human capital stocks to be higher when limited resources are reallocated from later to earlier grade levels. However, empirical research has by and large failed to fulfill this expectation. Evaluations of early childhood intervention programs like Headstart have generally produced inconclusive results (Cicirelli, 1969; Bronfenbrenner, 1974; Ryan, 1974).2 There are several possible explanations for this finding, but the one explored in this research is low marginal productivity, with respect to the stock of terminal capital, of school inputs received in the early grades. While the conventional belief among psychologists and educators has been that this productivity is high (Hunt, 1961; Bloom, 1964), others have argued that the marginal product of school inputs in producing terminal capital is higher in the adolescent years than the early childhood years (Rohwer, 1971). If the latter view is correct, compensatory education programs should maximize terminal capital by increasing school resources in the secondary grades, not the early elementary grades. The purpose of this article is to estimate the productivity of school inputs over time for both "advantaged" and "disadvantaged" children. The estimates obtained will have implications for the optimal allocation of limited school resources over the school-life.3 In the case of disadvantaged children, the estimates provide one possible explanation for the presumed failure of compensatory, early childhood education programs. In the case of advantaged children, the results offer one prediction of the success of non-compensatory, early childhood education, which is receiving increasing political support these days. The model of human capital accumulation is derived and described in the next section, followed by a discussion of the data and sample used in the estimation of the model. Subsequently, the estimated results are presented, and the policy implications of the results are explored.

A Theory of the Production and Allocation of Effort

Abstract: The purpose of this paper is to analyze systematically the production of effort and its allocation among different market and non-market sectors. I believe that this analysis can explain much of the variation in earnings that is not explained by human capital. The first section introduces the material. The next section develops the basic theoretical analysis of the production and allocation of effort by a free person. Section III applies this analysis to the value placed on time a1 located to the non-market sector, the effect of hours worked on fatigue and earnings, life cycle variations-in earnings and hours worked, investment in health, and the effect of marriage on the earnings and health of men and women. Section IV considers worker effort from the view point of firms, and shows how various characteristics of firms determine the wage rates offered and the effort supplied by their workers. Section V analyzes the production and allocation of effort by slaves, and derives "expropriation rates'' and other implications about the treatment of slaves .

Optimal skill mix: An application of the maximum principle for systems with retarded controls

Abstract: In this paper, we analyze the optimal skill mix in a model with two kinds of imperfectly substitutable labor, skilled and unskilled. The population is characterized by a distribution of innate abilities, and individuals are trained according to optimal rules or market rules (with imperfect expectations); the length of each individual's training period depends upon his innate ability. The market and optimal rules are characterized and compared, and corrective policies are investigated. This model represents a major advance over earlier models, which are based on the following assumptions: (a) either unskilled and skilled labor are perfectly substitutable or training is a necessary condition for employment; (b) individuals are innately identical; (c) in most cases, training occurs either instantaneously or with fixed lag.

The division of labor in the firm

Abstract: In this paper, Adam Smith's theory of labor specialization is formulated and tested. The restrictions in the theory are explicitly derived, and Smith's Theorem — that specialization will rise with the output rate — is rigorously stated. A simple human capital model is then employed to derive testable implications of the theory. Wage equations are estimated for the U.S. shipbuilding industry during World War II. The peculiarities of the war data notwithstanding, the results are strongly supportive of the theory.

The Philippine social indicators project

Abstract: The Social Indicators Project of the Development Academy of the Philippines (1974) aimed to formulate a measurement system capable of objectively depicting periodic changes in national development. It identified the following as basic Philippine social concerns: (1) Health and Nutrition, (2) Learning, (3) Income and Consumption, (4) Employment, (5) Non-human Productive Resources, (6) Housing, Utilities, and the Environment, (7) Public Safety and Justice, (8) Political Values, and (9) Social Mobility. This list is unique in considering political welfare. A multi-disciplinary research team selected 30 major indicators pertinent to these concerns. Although the majority are already encompassed by the Philippine statistical system, certain new indicators were proposed, including disability due to illness, human capital created by schooling, net beneficial product, families below a food threshold, an index of housing adequacy, an air pollution index for Greater Manila, an index of perceived public safety, indices of political mobility and efficacy, and indices of occupational mobility and perceived social mobility. A survey of 1000 households was used to demonstrate the feasibility of gathering needed new primary data, particularly those attitudinal in nature. An analysis of time series showed that certain aspects of Philippine welfare have been notably improving, but that others have been worsening; the direction of national progress can only be ascertained by admitting value-judgments on the relative importance of the several components of welfare.

A Theory of the Production and Allocation of Effort

Abstract: The purpose of this paper is to analyze systematically the production of effort and its allocation among different market and non-market sectors. I believe that this analysis can explain much of the variation in earnings that is not explained by human capital. The first section introduces the material. The next section develops the basic theoretical analysis of the production and allocation of effort by a free person. Section III applies this analysis to the value placed on time a1 located to the non-market sector, the effect of hours worked on fatigue and earnings, life cycle variations-in earnings and hours worked, investment in health, and the effect of marriage on the earnings and health of men and women. Section IV considers worker effort from the view point of firms, and shows how various characteristics of firms determine the wage rates offered and the effort supplied by their workers. Section V analyzes the production and allocation of effort by slaves, and derives "expropriation rates'' and other implications about the treatment of slaves .

An Evaluation of the Labor Market Status of Chinese Americans

Abstract: The persistence of wide disparities in family income by race and the failure of education to raise the wages of the non-white population as a whole’ have long concerned social scientists who study the labor market in the United States. Two major approaches which attempt to explain these phenomena are the human capital school and the radical perspective. The human capital school recognizes the importance of investment in people as an underlying principle in the theoretical and empirical analysis of income distribution. According to this school, differences among individuals in their stock of “human capital” (level of education, years of work experience) explain much of the variation in their earnings.‘ Other socioeconomic factors, such as legislation, housing, and the health and welfare systems are assumed to have no significant impact on occupation and earnings. In contrast, the radical perspective rejects the above assumption made by those of the human capital school as clearly untenable because of the various forms of institutional racism directed against ethnic minorities in the United States. This view questions the existing socioeconomic system and argues that the plight of various

The Rate of Return to University Education for Males in the Australian Public Service

Abstract: So often individuals make decisions crucial to their lives which are based on scanty information of the consequences. Until recently, ignorance pervaded one particular area of individual decision-making, that of the economic returns to education. With the use of extensive income data, and armed with age-earnings profiles and internal rate of return formulae, the economist has attacked the lack of knowledge with varying degrees of success. This paper presents the results of one such investigation; that of the economic returns to university education for males in the Second and Third Divisions of the Australian Public Service. The pecuniary advantage of holding a degree is estimated under various assumptions of student earnings and time rates of preference for consumption and income. In addition, the economic return to a strategy of part-time univer sity study is compared with the paths of no study and full-time study. The data does not support the human capital hypothesis that individuals attempt to maxi m...

Implications of Technology Transfers for the USSR

Abstract: : Within the past hundred years of Russian history there have been two major periods of concentrated effort to acquire advanced foreign technology. The first of these was connected with the industrialization spurt in the 1890s. As a result of this foreign investment, not only was the capital stock of Russia greatly expanded, but also foreign technology was brought into Russia, both in the form of advanced capital equipment itself and in the form of human capital. Foreign technologists, experienced businessmen, managers and engineers came to Russia as foreign companies were set up within Russia. Direct foreign investment was thus responsible for the implantation of advanced techniques in several key industries. Moreover, the foreign firms competed with Russian firms inside Russia and forced the latter to be more efficient if they were to survive.

The migration of Egyptian human capital to the Arab oil-producing states: a cost-benefit analysis.

Abstract: The rate of return analysis is utilized to evaluate the profitability of exporting human capital from Egypt to the Arab oil-producing states from two alternative perspectives. A preliminary estimate of the internal rate of return from the perspective of the welfare of Egyptian nationals is extremely high in the case of Egyptian teachers in Saudi Arabia. From the alternative perspective of economic development in Egypt existing gaps in the data make impossible at this time an accurate estimate of the rate of return. However if Egyptians employed in the Gulf States were required to remit fixed portions of their income to Egypt and significant foreign transfer payments were received from the host countries the migration of educated Egyptians would almost certainly be profitable from the second perspective as well. (authors)

The structure of employment and unemployment in a declining rural community

Abstract: Recent multidisciplinary research, concentrating on small rural communities, has posited a theory of "social marginalization" whereby economic, institutional and cultural forces combine to select certain people out of mainstream economic society; that is, certain people become socially marginal (see Western Rural Development Center Discussion Paper Series No. 1 through 8). A portion of this theory involves the transformation of human capital through a stage referred to as the "set-up." "The set-up is the preparation of certain mainstream jobholders for marginal society. Sometimes preparation begins with job displacement and continued underemployment or unemployment as the job applicant is rejected by potential employers. Set-up continues as the elements of a person's environment (family, social network, church, etc.) make human capital investments in the person which suit him more for the demand of job markets in marginal society (such as crime or welfare) than for a job in mainstream society." [Ayer, et al., 1975] . Researchers in Arizona have selected the historic