Showing papers on "Human capital published in 1995"

Understanding Risk and Return

Abstract: This paper uses an equilibrium multifactor model to interpret the cross-sectional pattern of postwar U.S. stock and bond returns. Priced factors include the return on a stock index, revisions in forecasts of future stock returns (to capture intertemporal hedging effects), and revisions in forecasts of future labor income growth (proxies for the return on human capital). Aggregate stock market risk is the main factor determining excess returns; but in the presence of human capital or stock market mean reversion, the coefficient of relative risk aversion is much higher than the price of stock market risk.

Human resources: empirical modeling of household and family decisions.

Abstract: This literature review focuses on education and health in its examination of the role that households and families play in choosing how to invest the human capital of their members. The introductory section describes the history of the development of economic models of the household and reviews how theoretical developments have become linked with data collection. The second section of the report looks at the effects of income on nutritional status and the reverse influence of nutrition (health) on labor productivity (income). Despite the controversies existing in the literature and the difficulties in choosing among the array of solutions to defined problems there is little doubt that investments in education and health enhance productivity fertility child health and child educational attainment. In an attempt to shed light on the underlying mechanisms in these relationships Section 3 focuses on the estimation of reduced form demands for human capital and considers the measurement of human capital; the effects of determinants such as education household resources and community resources; endogenous program placement and selective migration; and the possible estimation bias imposed by fertility and mortality selection. Section 4 continues this investigation by considering the process underlying the production of human capital in terms of the empirical issues involved in estimation of static and dynamic production functions as well as applications to child health and applications to educational attainment. Section 5 relates labor productivity to education and considers data issues the functional form of studies ability family background and school quality. Recent developments in modeling household behavior in a dynamic setting are reviewed in Section 6 and Section 7 describes links among individuals households and families. The concluding section notes that continued integration of survey data collection with theoretical frameworks will lead to a substantial improvement in our understanding of the magnitude of the significance of the effects predicted by the theory.

Social Capital and Successful Development among At-Risk Youth

Abstract: Social scientists have been slow to appreciate the great diversity among the poor. Until quite recently, researchers have devoted more attention to examining patterns of persistent poverty than to understanding how individuals and families maneuver their way out of economic disadvantage (for exceptions, see Clark, 1983; Kellam, Ensminger, & Turner, 1977; Williams Kornblum, 1985). Evidence about mobility patterns among the poor provides a perfect analogy to the half-empty/half-full glass. Of individuals who begin life in poverty, at least as many manage to improve their circumstances as remain persistently impoverished (Duncan, Hill, & Hoffman, 1988). Yet relatively little is known about how and why some of the disadvantaged eventually escape while others remain entrapped in poverty. As researchers from different disciplines have begun to tackle this problem, they have, not surprisingly, each featured explanations congenial to their distinctive ways of looking at the world. Economists stress the importance of financial and human capital, highlighting how individuals invest time and money to improve their long-term position in the labor force (Palmer, Smeeding, & Torrey, 1988). Psychologists point out the importance of individual traits such as competence and self-efficacy, both of which are linked to upward mobility (Bandura, 1989; Garmezy, 1985; Rutter & Madge, 1976; Werner & Smith, 1982). Sociologists, for their part, underscore the importance of institutional resources and social networks in the communities where poor people reside (Granovetter, 1973; Wellman 8t Wortley, 1990). Of course, in reality these different sorts of mechanisms often operate in tandem. Perhaps the most interesting question, then, is how these various sources of differentiation among the poor are packaged together. Answering the question of how id why certain types of individuals locate and use resources that are often in short supply within their local environments to improve their own prospects, or the long-term prospects of their children, involves integrating the different disciplinary perspectives. This article draws on data from a longitudinal study of teenage mothers and their children to investigate sources of differentiation on several indicators of young adult success. In particular, we explore the role of social capital, a concept developed by Coleman (1988) that to some extent bridges the disciplinary gaps described above. Our goal is to determine whether successful outcomes among our sample of disadvantaged youth are related to measures of both family-based and community-based social capital. SOCIAL CAPITAL AND YOUTH DEVELOPMENT The process of investment in the economic, psychological, and social resources believed to be associated with upward mobility begins early in life and typically takes place within the family. Parents, in addition to utilizing their financial resources, cultivate and promote individual competencies in their children; with varying degrees of effectiveness, these same parents seek opportunities in the environment and attempt to shelter their children from dangers. Thus, the family represents a point of common interest to social scientists seeking to understand why and how certain children are able to escape the powerful disadvantage of growing up poor. Coleman (1988) employed the term social capital to designate the complex and variegated social mechanisms that parents garner to advance their children's chances of success. Coleman's description of social capital is quite broad and overlaps with some of the specific theoretical constructs and processes identified by developmental psychologists attempting to explain the successful adaptation of children at risk of long-term disadvantage (see, e.g., Garmezy & Rutter, 1983). Coleman's ideas also echo the approach to studying development formulated by Bronfenbrenner and his students (e.g., Bronfenbrenner, 1979; Garbarino, 1992; Steinberg, Dornbusch, & Brown, 1992). …

Ethnicity, Neighborhoods, and Human-Capital Externalities

Abstract: The socioeconomic performance of today's workers depends not only on parental skills but also on the average skills of the ethnic group in the parents' generation (or ethnic capital). This paper investigates the link between the ethnic externality and ethnic neighborhoods. The evidence indicates that residential segregation and the external effect of ethnicity are linked, partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised. Ethnicity has an external effect, even among persons who grow up in the same neighborhood, when children are exposed frequently to persons who share the same ethnic background. Copyright 1995 by American Economic Association.

The International Diversification Puzzle is Worse Than You Think

Abstract: Despite the growing integration of international financial markets, investors do not diversify internationally to any significant extent. The authors show that this 'international diversification puzzle' is deepened once they consider the implications of nontraded human capital for portfolio composition. While growth rates of labor and capital income are not highly correlated within countries, the authors find that the returns to human capital and physical capital are very highly correlated within four OECD countries. Hedging human capital risk therefore involves a substantial short position in domestic marketable assets. A diversified world portfolio will involve a negative position in domestic marketable assets. Copyright 1997 by American Economic Association.

How Does Privatization Work? Evidence from the Russian Shops

Abstract: We use a survey of 452 Russian shops, most of which were privatized between 1992 and 1993, to measure the importance of alternative channels through which privatization promotes restructuring. Restructuring is measured as capital renovation, change in suppliers, increase in hours that stores stay open, and layoffs. There is strong evidence that the presence of new owners and new managers raises the likelihood of restructuring. In contrast, there is no evidence that equity incentives of old managers promote restructuring. The evidence points to the critical role that new human capital plays in economic transformation.

Global Food Projections to 2020: Implications for Investment

Abstract: This paper examines the global food security picture through 2020, using a model that incorporates 35 individual countries and regions and 17 commodities to estimate supply and demand for food. It concludes that if governments and the international community maintain current levels of commitment to agricultural growth through cost-effective investment in agricultural research, extension, irrigation and water development, human capital, and rural infrastructure, the world as a whole will not experience overwhelming pressure but food security in many developing countries, particularly in South Asia and Sub-Saharan Africa, will improve little. The paper also presents a more pessimistic scenario brought about by cuts in investment in agriculture and a more hopeful scenario based on increased investment.

The Promise of Public Sector-Sponsored Training Programs

Abstract: As concern about workers’ skills has risen, so has interest in the role that government training programs might play in addressing ‘America's workforce crisis.’ One way to gauge whether increased reliance on these programs will substantially improve the skills of the workforce is to examine the impact of past programs. The evidence from these programs indicates that, although the gains were small, for the most part we got what we paid for. This outcome should not be surprising because investments in training were exceedingly modest compared to the skill deficiencies that policymakers have been trying to address.

Women's education and economic well-being

Abstract: Evidence across regions in the world reveals patterns in school enrollment ratios and literacy that are divided along gender lines. In the developing world, apart from most countries in Latin America and the Caribbean, enrollment ratios of girls lag behind those for boys at all levels of education. Worldwide literacy rates for adult men far exceed those for women. While educational progress has been enjoyed by both sexes, these advances have failed to eradicate the gender gap. Education enhances labor market productivity and income growth for all, yet educating women has beneficial effects on social well-being not always measured by the market. Rising levels of education improve women's productivity in the home which in turn can increase family health, child survival, and the investment in children's human capital. The social benefits from women's education range from fostering economic growth to extending the average life expectancy in the population, to improving the functioning of political processes. ...

Schooling, Labor Force Quality, and Economic Growth

Abstract: Human capital is almost always identified as a crucial ingredient for growing economies, but empirical investigations of cross-national growth have done little to clarify the dimensions of relevant human capital or any implications for policy. This paper concentrates on the importance of labor force quality, measured by cognitive skills in mathematics and science. By linking international test scores across countries, a direct measure of quality is developed, and this proves to have a strong and robust influence on growth. One standard deviation in measured cognitive skills translates into one percent difference in average annual real growth ratesþan effect much stronger than changes in average years of schooling, the more standard quantity measure of labor force skills. Further, the estimated growth effects of improved labor force quality are very robust to the precise specification of the regressions. The use of measures of quality significantly improves the predictions of growth rates, particularly at the high and low ends of the distribution. The importance of quality implies a policy dilemma, because production function estimates indicate that simple resource approaches to improving cognitive skills appear generally ineffective.

Gender Differences In Agricultural Productivity: A Survey of Empirical Evidence

Abstract: This paper reviews the econometric evidence on gender differences in agricultural productivity. It provides a methodological overview and a critique of (1) production function-based estimates of technical and labor productivity differences by gender, (2) individual (gender-disaggregated) labor supply and earnings functions and (3) studies of the determinants of technological adoption. The review finds that (1) in general, male and female farmers are equally efficient as farm managers. Women farmers' lower yields are attributable to lower levels of inputs and human capital than men. However, the use of coefficients estimated from these studies for simulation exercises may not be valid if endogenous input choice is not considered; (2) returns to schooling for both men and women are significant in dynamic agricultural settings where modern technologies have been introduced. Returns to an additional year of women's education range from 2 to 15 percent, which compares favorably with those of men; and (3) farmers with more education are more likely to adopt new technologies. Providing universal primary education also stimulates early adoption by female farmers, whom other women are more likely to imitate. Farmers with more land and farm tools are also more likely to adopt new technologies. To the extent that women farmers may have less education, less access to land, and own fewer tools, they may be less likely to adopt new technologies.

The Soviet Economic Decline

Abstract: Soviet growth from 1960 to 1989 was the worst in the world after we control for investment and human capital; the relative performance worsens over time. There is some evidence that the burden of defense spending modestly contributed to the Soviet debacle. The declining Soviet growth rate from 1950 to 1987 can be accounted for by a declining marginal product of capital with a constant rate of growth of total factor productivity. The Soviet reliance on extensive growth (rising capital-to-output ratios) was no greater than that of market economies, such as Japan and the Republic of Korea, but a low elasticity of substitution between capital and labor implied especially acute diminishing returns to capital compared with the case in market economies. Copyright 1995 by Oxford University Press.

How Does Foreign Direct Investment Affect Economic Growth

Abstract: We test the effect of foreign direct investment (FDI) on economic growth in a cross-country regression framework, utilizing data on FDI flows from industrial countries to 69 developing countries over the last two decades Our results suggest that FDI is an important vehicle for the transfer of technology, contributing relatively more to growth than domestic investment However, the higher productivity of FDI holds only when the host country has a minimum threshold stock of human capital In addition, FDI has the effect of increasing total investment in the economy more than one for one, which suggests the predominance of complementarity effects with domestic firms

Economic Convergence and Economic Policies

Abstract: Many of the crucial debates in development economics are encapsulated in the question of economic convergence. Is there a tendency for the poorer countries to grow more rapidly than the richer countries, and thereby to converge in living standards? Some recent research on endogenous growth has emphasized increasing returns as a possible reason not to expect convergence. Other research has suggested that convergence may be achieved only after poor countries attain a threshold level of income or human capital. This paper presents evidence that a sufficient condition for higher-than-average growth of poorer countries, and therefore convergence, is that poorer countries follow reasonably efficient economic policies, mainly open trade and protection of private property rights.(This abstract was borrowed from another version of this item.)

“Human Capital Flight”: Impact of Migration on Income and Growth

Abstract: An endogenous growth model with heterogeneous agents is analyzed to show that “human capital flight” or “brain drain” can lead to a permanent reduction in income and growth of the country of emigration relative to the country of immigration. Convergence between the two is therefore rendered unlikely with such migration. While, in a closed economy, subsidizing human capital accumulation at all levels of education can benefit economic growth, in an open economy where the educated are more likely to migrate, growth may be better fostered by subsidizing only lower levels of education.

Growth in Sub-Saharan Africa

Abstract: The paper investigates empirically the determinants of economic growth for a large sample of sub-Saharan African countries during 1981-92. The results indicate that (i) an increase in private investment has a relatively large positive impact on per capita growth; (ii) growth is stimulated by public policies that lower the budget deficit in relation to GDP (without reducing government investment), reduce the rate of inflation, maintain external competitiveness, promote structural reforms, encourage human capital development, and slow population growth; and (iii) convergence of per capita income occurs after controlling for human capital development and public policies.

Chapter 34 Human resources: Empirical modeling of household and family decisions

Abstract: Publisher Summary This chapter reviews recent advances in the empirical literature on the role that households and families play in investing in human resources It describes the estimation of reduced form demands for human capital, particularly education and health Special attention is paid to the measurement and interpretation of the impact of household resources, particularly parental education, income, and impact of community resources, namely—prices and infrastructure The process underlying the production of human capital is discussed The chapter also discusses the difficulties in measuring inputs and input quality, and associated issues of estimation and interpretation The chapter focuses on evidence regarding the influence of family background, school quality, ability, and self-selection Models of household behavior in a dynamic setting are reviewed The chapter discusses extensions to the model that is concerned with the flow and allocation of resources across and within households as well as to extensions that treat household boundaries as fluid

Is High School Employment Consumption or Investment

Abstract: Using data from the National Longitudinal Survey of Youth, this study examines whether employment by high school students improves or worsens economic attainment 6 to 9 years after the scheduled date of high school graduation. There is no indication that light to moderate job commitments ever have a detrimental impact and hours worked during the senior grade are positively correlated with future earnings, fringe benefits, and occupational status. These results are robust across a variety of specifications and suggest that employment increases net investments in human capital and facilitates the school- to-work transition, particularly towards the end of high school and for students not continuing on to college.

Beyond the Incidence of Training: Evidence from a National Employers Survey

Abstract: This paper seeks to provide new insight into how school and post school training investments are linked to employer workplace practices and outcomes using a unique nationally representative survey of establishments in the U.S., the Educational Quality of the Workforce National Employers Survey (EQW-NES). We go beyond simply measuring the incidence of formal or informal training to examine the determinants of the types employers invest in, the relationship between formal school and employer provided training, who is receiving training, the links between investments in physical and human capital, and the impact that human capital investments have on the productivity of establishments. We find that the smallest employers are much less likely to provide formal training programs than employers from larger establishments. Regardless of size, those employers who have adapted some of the practices associated with what have been called `high performance work systems' are more likely to have formal training programs. Employers who have made large investments in physical capital or who have hired workers with higher average education are also more likely to invest in formal training and to train a higher proportion of their workers, especially in the manufacturing sector. There are significant and positive effects on establishment productivity associated with investments in human capital. Those employers who hire better educated workers have appreciably higher productivity. The impact of employer provided training differs according to the nature, timing and location of the employer investments.

Corporate equal opportunities (non-) disclosure☆

Abstract: This paper is concerned with corporate reporting on equal opportunities impact in Britain. Despite various legislation (e.g. The Disabled Persons (Employment) Acts 1944 and 1958 and more recent sex discrimination and race relations acts) and business initiatives aimed at the development of human capital to meet the needs of the market economy (e.g. Opportunity 2000), there remains concern at both the position of minority groups who face discrimination in employment, and the lack of accountability by employers for their equal opportunities policies.? In recognition of the potential influence of the corporate annual report and accounts in shaping what is considered important in society (Burchell et al ., 1980) we used content analysis to study the equal opportunities reporting of a sample of 100 British firms. A detailed analysis of reporting is presented, along with examples of accounts of equal opportunities impact. Despite focusing on the largest firms, where previous research has suggested there is likely to be greater voluntary social disclosure, our research has revealed little detailed reporting. Most reporting appears to have been in response to legislation requiring firms to comment on their employment of disabled people, although our study reveals that only a minority of firms in the sample comply fully with the legislation. Only a very small number of firms referred to their monitoring of employment of minority groups and very few take the opportunity to disclose any breakdown of employees by number. The final section of the paper briefly discusses possible reasons for non-disclosure.

On the Economics of Marriage - A Theory of Marriage, Labor and Divorce.

Abstract: This book presents a theory that integrates marriage markets and labor markets (Part 2). She uses data, primarily from Israel and the United States, to predict the effects of particular factors, such as individual resources and market size, on individual and market labor supply and marital outcomes, including bargaining power, polygamy, marriage contract, divorce and fertility. Parts 3 and 4 consider some implications of the theory for the study of sex ratio effects and compensating differentials in marriage. Part 5 provides further applications to the study of cohabitation, divorce, and polygamy. Part 6 examines how a spouse's help increases a person's human capital. The approach is interdisciplinary, combining aspects of sociology, demography, and anthropology, as well as economics.

Learning, Matching and Growth

Abstract: We examine an endogenous growth model in which market frictions are an integral part of the economic environment. Workers invest in education when young, which raises their productivity onice employed. The level of schooling also acts as a key determinant of the rate of economic growth by influencing workers' ability to accumulate additional human capital on-the-job. Once schooling is completed, workers search for employment. The division of the surplus between vacancies and searching workers is characterized, as is the optimal level of education. The economy may display multiple steady-state growth paths.

Recruiting Smarter Teachers.

Abstract: In recent years many states have raised teacher salaries to attract more capable teachers. Since teacher labor markets are typically in a state of excess supply, success of such policies is contingent on containing perverse feedbacks which arise among exit decisions, vacancy rates, and the willingness of prospective teachers to invest in occupation-specific human capital. Using SAT scores as a measure of ability, we find that an across-the-board raise produces modest improvements in the work force at best. Indeed, under plausible parameter values, it is possible for mean ability to decline.

Schooling, Labor Force Quality, and Economic Growth

Abstract: Human capital is almost always identified as a crucial ingredient for growing economies, but empirical investigations of cross-national growth have done little to clarify the dimensions of relevant human capital or any implications for policy. This paper concentrates on the importance of labor force quality, measured by cognitive skills in mathematics and science. By linking international test scores across countries, a direct measure of quality is developed, and this proves to have a strong and robust influence on growth. One standard deviation in measured cognitive skills translates into one percent difference in average annual real growth ratesþan effect much stronger than changes in average years of schooling, the more standard quantity measure of labor force skills. Further, the estimated growth effects of improved labor force quality are very robust to the precise specification of the regressions. The use of measures of quality significantly improves the predictions of growth rates, particularly at the high and low ends of the distribution. The importance of quality implies a policy dilemma, because production function estimates indicate that simple resource approaches to improving cognitive skills appear generally ineffective.

Leveraging Human Assets in Law Firms: Human Capital Structures and Organizational Capabilities:

Abstract: Partners in a law firm are the source of firm knowledge and hold claims to the firm's residual income; associates work for partners, acquire knowledge, and receive a fixed level of compensation. The author uses the ratio of associates to partners to measure the leveraging of human assets in law firms, which he likens to the leveraging of financial capital in other firms. Analyzing data on 312 large offices of law firms in 1991, he finds that this leverage ratio was related to business strategy, human resource management, and organizational structure. As an index of law firms' human capital structures, it also had important implications for organizational capabilities and firm competitiveness. For example, offices characterized by a rare and tightly controlled human capital structure had the highest billing rates, reflecting their capability of providing clients with services that deeply embody the knowledge of partners.