Showing papers on "Human capital published in 1998"

Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises

Abstract: We examine the relationship between the intellectual capital of scientists making frontier discoveries, the presence of great university bioscience programs, the presence of venture capital firms, other economic variables, and the founding of U.S. biotechnology enterprises during 1976-1989. Using a linked cross-section/time- series panel data set, we find that the timing and location of the birth of biotech enterprises is determined primarily by intellectual capital measures, particularly the local number of highly productive 'star' scientists actively publishing genetic sequence discoveries. Great universities are likely to grow and recruit star scientists, but their effect is separable from the universities. When the intellectual capital measures are included in our poisson regressions, the number of venture capital firms in an area reduces the probability of foundings. At least early in the process, star scientists appear to be the scarce, immobile factors of production. Our focus on intellectual capital is related to knowledge spillovers, but in this case 'natural excludability' permits capture of supranormal returns by scientists. Given this reward structure technology transfer was vigorous without any special intermediating structures. We believe biotechnology may be prototypical of the birth patterns in other innovative industries.

Network Support and the Success of Newly Founded Businesses

Abstract: The "network approach to entrepreneurship" is a prominent theoretical perspective within the literature on entrepreneurship. This literature assumes that network resources, networking activities and network support are heavily used to establish new firms (network founding hypothesis). Further, those entrepreneurs, who can refer to a broad and diverse social network and who receive much support from their network are more successful (network success hypothesis). Based on a study of 1,700 new business ventures in Upper Bavaria (Germany), the article gives an empirical test of the network success hypothesis. It is argued that one reason, why previous studies did not consistently find positive network effects, may be that social capital (network support) is used to compensate shortfalls of other types of capital (human capital and financial capital). This compensation hypothesis, however, does not find empirical confirmation. On the other hand, however, the network success hypothesis proves to be valid in our analyses, i.e. network support increases the probability of survival and growth of newly founded businesses.

Resource Abundance and Economic Development

Abstract: I. INTRODUCTION Introduction and Overview II. CRITICAL PARAMETERS IN RESOURCE-BASED DEVELOPMENT MODELS 2. Natural Resources, Capital Accumulation, Structural Change, and Welfare 3. The Sustainability of Extractive Economies 4. Natural Resources, Human Capital, and Growth 5. The Social Foundations of Poor Economic Growth in Resource-Rich Countries III. LONG-TERM PERSPECTIVE ON, AND MODELS OF, RESOURCE-BASED GROWTH 6. Natural Resources and Economic Development: The 1870-1914 Experience 7. Short-Run Models of Contrasting Natural Resource Endowments 8. Political Economy of Resource-Abundant States IV. DEVELOPMENT TRAJECTORIES OF RESOURCE-ABUNDANT COUNTRIES 9. Competitive Industrialization with Natural Resource Abundance: Malaysia 10. A Growth Collapse with Diffuse Resources: Ghana 11. A Growth Collapse with Point Resources: Bolivia 12. A Growth Collapse with High Rent Point Resources: Saudi Arabia 13. Large Resource-Abundant Countries Squander their Size Advantage: Mexico and Argentina V. LESSONS FOR POLICY REFORM 14. Reforming a Small Resource-Rich Developing Market Economy: Costa Rica 15. Growth, Capital Accumulation, and Economic Reform in South Africa 16. Reforming Resource-Abundance Transition Economies: Kazakhstan and Uzbekistan 17. Reforming a Large Resource-Abundant Transition Economy: Russia 18. A Nordic Perspective on Natural Resource Abundance VI. CONCLUSIONS 19. Conclusions: Resource Abundance, Growth Collapse, and Policy

Does Corruption Affect Income Inequality and Poverty

Abstract: This paper demonstrates that high and rising corruption increases income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings hold for countries with different growth experiences, at different stages of development, and using various indices of corruption. An important implication of these results is that policies that reduce corruption will also lower income inequality and poverty.

Labor Supply: A Review of Alternative Approaches

Abstract: This chapter surveys existing approaches to modeling labor supply and identifies important gaps in the literature that could be addressed in future research. The discussion begins with a look at recent policy reforms and labor market facts that motivate the study of labor supply. The analysis then presents a unifying framework that allows alternative empirical formulations of the labor supply model to be compared and their resulting elasticities to be interpreted. This is followed by critical reviews of alternative approaches to labor-supply modeling. The first review assesses the difference-in-differences approach and its relationship to natural experiments. The second analyzes estimation with non-linear budget constraints and welfare-program participation. The third appraises developments of family labor-supply models including both the standard unitary and collective labor-supply formulations. The fourth briefly explores dynamic extensions of the labor supply model, characterizing how participation decisions, learning-by-doing, human capital accumulation and habit formation affect the analysis of the lifecycle model. At the end of each of the four broad reviews, we summarize a selection of the recent empirical findings. The concluding section asks whether the developments reviewed in this chapter place us in a better position to answer the policy-reform questions and to interpret the trends in participation and hours with which we began this review. © 1999 Elsevier Science B.V. All rights reserved.

Seven Practices of Successful Organizations

Abstract: In this excerpt from his recently published book, The Human Equation: Building Profits by Putting People First, the author argues that many managers continue to overlook the extent to which the more effective management of people can improve firm economic performance. Firms that seek to produce enhanced economic performance through the management their human capital have adopted a number of common personnel practices. These include the provision of employment security, the selective hiring of new personnel, decentralized decision making, high compensation contingent on organizational performance, extensive training, minimal status distinctions and barriers, and the extensive sharing of financial and performance information throughout the firm.

Human capital, social capital, and firm dissolution

Abstract: This study examined the effect of human and social capital upon firm dissolution with data from a population of Dutch accounting firms for the period 1880–1990. Human capital was captured by firm-l...

Early failure in the labor market : Childhood and adolescent predictors of unemployment in the transition to adulthood

Abstract: The authors investigate the childhood and adolescent predictors of youth unemployment in a longitudinal study of young adults who have been studied for the 21 years since their births in 1972-1973. They test hypotheses about the predictors of youth unemployment using information about each individual's human capital, social capital, and personal capital. In the human capital domain, lack of high-school qualifications, poor reading skills, low IQ scores, and limited parental resources significantly increased the risk of unemployment. In the social capital domain, growing up in a single-parent family, family conflict, and lack of attachment to school also increased the risk of unemployment. In the personal capital domain, children involved in antisocial behavior had an increased risk of unemployment. These predictors of unemployment reached back to early childhood, suggesting that they began to shape labor-market outcomes years before these youths entered the work force. In addition, these effects remained significant after controlling for the duration of education and educational attainment, suggesting that many early personal and family characteristics affect labor-market outcomes, not only because they restrict the accumulation of human capital (e.g., education), but also because they directly affect labor-market behaviors. Failure to account for prior social, psychological, and economic risk factors may lead to inflated estimates of the effects of unemployment on future outcomes

Education, Personal Control, Lifestyle and Health: A Human Capital Hypothesis

Abstract: The concept of human capital implies that education improves health because it increases effective agency. We propose that education's positive effects extend beyond jobs and earnings. Through educ...

The Firm as a Subeconomy

Abstract: The paper explores the economic role of the firm in a market economy. The analysis begins with a discussion and critique of the property rights approach to the theory of the firm as exposited in the recent work by Hart and Moore ("Property Rights and the Nature of the Firm"). It is argued that the Hart-Moore model, taken literally, can only explain why individuals own assets, but not why firms own assets. In particular, the logic of the model suggests that each asset should be free standing in order to provide maximal flexibility for the design of individual incentives. These implications run counter to fact. One of the key features of the modern firm is that it owns essentially all the productive assets that it employs. Employees rarely own any assets; they only contribute human capital. Why is the ownership of assets clustered in firms? The paper outlines an answer based on the notion that control over physical assets gives control over contracting rights to those assets. Metaphorically, the firm is viewed as a miniature economy, an "island" economy, in which asset ownership conveys the CEO the power to define the "rules of the game", that is, the ability to restructure the incentives of those that accept to do business on (or with) the island. The desire to regulate trade in this fashion stems from contractual externalities characteristic of imperfect information environments. The inability to regulate all trade through a single firm stems from the value of exit rights as an incentive instrument and a tool to discipline the abuse of power.

Institutions, investment, and growth: new cross‐country and panel data evidence

Abstract: This paper outlines the alternative channels through which institutions affect growth, and studies the empirical relationship between institutions, investment, and growth. The empirical results indicate that (i) free-market institutions have a positive effect on growth; (ii) economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment; (iii) political and civil liberties may stimulate investment; (iv) an important interaction exists between freedom and human capital investment; (v) Milton Friedman's conjectures on the relation between political and economic freedom are correct; (vi) promoting economic freedom is an effective policy toward facilitating growth and other types of freedom. (JEL O17, O40, P51)

The effect of emigration on human capital formation.

Abstract: This paper focuses on a possible effect of emigration on human capital formation. Emigration to a higher returns to skill country provides an incentive to invest in human capital. The level of human capital formation in the source country can therefore be positively correlated with the probability of emigration. Incidentally a surge in emigration can lead the source country out of an under-development trap. The implications of the model for the convergence controversy are also discussed.

Children who prosper in unfavorable environments: the relationship to social capital

Abstract: OBJECTIVE. Social capital describes the benefits that are derived from personal social relationships (within families and communities) and social affiliations. This investigation examined the extent to which social capital is associated with positive developmental and behavioral outcomes in high-risk preschool children. DESIGN. A cross-sectional case-control analysis of young children "doing well" and "not doing well" at baseline in four coordinated longitudinal studies. PARTICIPANTS. A total of 667 2- to 5-year-old children (mean age, 4.4 years) and their maternal caregivers who are participating in the Longitudinal Studies of Child Abuse and Neglect Consortium. At recruitment, all children were characterized by unfavorable social or economic circumstances that contributed to the identification of the children as high risk. MEASURES. Social capital was defined as benefits that accrue from social relationships within communities and families. A social capital index was created by assigning one point to each of the following indicators: 1) two parents or parent-figures in the home; 2) social support of the maternal caregiver; 3) no more than two children in the family; 4) neighborhood support; and 5) regular church attendance. Outcomes were measured with the Child Behavior Checklist, a widely used measure of behavioral/emotional problems, and with the Battelle Developmental Inventory Screening Test, a standardized test that identifies developmental deficits. Children were classified as doing well if their scores on these instruments indicated neither behavioral nor developmental problems. RESULTS. Only 13% of the children were classified as doing well. The individual indicators that best discriminated between levels of child functioning were the most direct measures of social capital-church affiliation, perception of personal social support, and support within the neighborhood. The social capital index was strongly associated with child well-being, more so than any single indicator. The presence of any social capital indicator increased the odds of doing well by 29%; adding any two increased the odds of doing well by 66%. CONCLUSIONS. Our findings suggest that social capital may have an impact on children's well-being as early as the preschool years. In these years it seems to be the parents' social capital that confers benefits on their offspring, just as children benefit from their parents' financial and human capital. Social capital may be most crucial for families who have fewer financial and educational resources. Our findings suggest that those interested in the healthy development of children, particularly children most at risk for poor developmental outcomes, must search for new and creative ways of supporting interpersonal relationships and strengthening the communities in which families carry out the daily activities of their lives. Language: en

Does Corruption Affect Income Inequality and Poverty

Abstract: This paper demonstrates that high and rising corruption increases income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings hold for countries with different growth experiences, at different stages of development, and using various indices of corruption. An important implication of these results is that policies that reduce corruption will also lower income inequality and poverty.

Human Capital Depletion, Human Capital Formation, and Migration. A Blessing in a "Curse"?

Abstract: We specify conditions under which a strictly positive probability of employment in a foreign country raises the level of human capital formed by optimizing workers in the home country. While some workers migrate, "taking along" more human capital than if they had migrated without factoring in the possibility of migration (a form of brain drain), other workers stay at home with more human capital than they would have formed in the absence of the possibility of migration (a form of brain gain).

Local Capitalism, Civic Engagement, and Socioeconomic Well-Being

Abstract: This analysis is designed to extend a newly emerging body of social stratification research grounded in theories of civil society. The goal of this larger body of research and writing is to provide an alternative social and economic developmentparadigm to the dominant neoclassical/rational choice/human capital perspective. In an economic world woven together by global marketforces, local social structures can become key variables that influence which places prosper and which decline. We begin by hypothesizing that local capitalism and civic engagement variables are associated with positive socioeconomic outcomes (higher income levels and lower levels of income inequality, poverty, and unemployment). To test these notions, we employ data on more than 3,000 U.S. counties. Net of the substantial effects of the control variables, three measures of local civic society -small manufacturing establishments, familyfarms, and civically engaged religious denominations - vary as hypothesized in three offour models. The performance of these local capitalism and civic engagement variables suggests a robust association with beneficial local socioeconomic outcomes. We conclude by outlining needed research on civil society that would contributefurther to a social developmentperspective. Over the past twenty-five years, social scientists have begun to define the contours of a global system of economic production and mass consumption (Wallerstein 1974). During this time, the orienting frame for analysis has shifted from an

Women's Choice to Pursue Self-Employment: The Role of Financial and Human Capital of Household Members

Abstract: Previous studies have attempted to identify which individuals choose self-employment rather than wage employment. Traditionally, these investigations have focused on men when considering the different characteristics which potentially distinguish entrepreneurs from non-entrepreneurs. Such a focus on men was justified, since until recently they constituted the vast majority of the self-employed. More recently, however, there has been a dramatic increase in the number of female entrepreneurs. While there were slightly more than 1 million self-employed women in 1969, that figure grew to well over 3 million by 1991 (U.S. Dept. of Labor 1969 and 1991). This increase reflected a roughly 500 percent growth rate relative to that of their male counterparts over the same period. Consequently, in part, there has been an emerging interest in identifying characteristics which distinguish female entrepreneurs from each other, and those characteristics which distinguish them from their male counterparts. Research to date has largely centered on the potential discriminating relevance of different psychological and sociological factors. The most commonly considered factors included personality traits relevant to achievement, locus of control, and risk-taking propensity. Brush (1992) provides a complete review of related studies. While research on female entrepreneurship has extensively considered such individual factors related to female self-employment choice, the potential effect of family and household composition has remained largely ignored. To help fill this gap, the present study considers the presence and absence of different family members as they potentially influence a woman's choice between wage employment and self-employment. Literature Review The potential effect of family composition on female labor force status and employment choice has long been a topic of study in the area of labor economics and demography. Probably the most widely examined issue has been the effect of the presence of young children on female participation in the labor force. Of particular concern has been the extent to which the cost of child care diminishes the likelihood of females participating in the labor force (Blau and Robins 1989; Presser and Baldwin 1980). Generally, the greater the cost of child care relative to the mother's wage potential, the less likely it is that she will seek employment. One way mothers may begin to overcome child care cost considerations is by pursuing self-employment. As self-employment typically permits a more flexible work schedule, it more readily enables mothers to care for their own children, thus reducing if not eliminating the cost of child care. Several researchers have noted that for mothers, entrepreneurship affords greater flexibility necessary to managing domestic and employment responsibilities (for example, see Birley 1989; Brash 1992 and 1990; Scott 1986; Darian 1975). Recognizing this possibility, a few isolated studies have examined the effect of the presence of young children on women choosing self-employment. based on a national sample of married women, MacPherson (1988) found initial evidence for this relationship. MacPherson's work was expanded when Connelly (1992) considered a sample of married and single women, and revealed similar results. Further corroborating evidence was most recently found by Robinson and Sexton (1994) when attempting to isolate the effect of education on employment choice. In addition to the presence of young children, the effect of a husband's role in the household has also been the focus of a few studies relevant to the impact of household composition on a woman's employment decisions. However, these studies are arguably limited in that they have either ignored certain husband-related effects or have neglected to partial them out adequately. Due to the different financial and human capital resources which husbands may possess, they may affect the woman's choice between wage employment and self-employment in a number of ways. …

Getting the Goods on Social Capital1

Abstract: This article presents an overview of the origins, development, rapid diffusion, and current usage of the concept of social capital in both the academic (research-oriented) and more applied (social policy) literature. Following a short quantitative survey of the appearance of the term in both theses and journals, various meanings of social capital are examined in the light of classical and contemporary sociological theory. Three main research approaches, which are based on the operationalization of social capital or its application as a heuristic device, are critically examined. These approaches are associated with the work ofJames Coleman, Pierre Bourdieu, and Robert Putnam, but there are also some references to the work of economists. The authors contend that, while social capital has value and appeal as a new term, basic theory needs greater development. In particular, attention should be paid to acknowledging the specific perspective on social capital that underlies its usage, the scale or level of analysis employed, and the value of a qualitative use of social capital.

Tax Burden and Migration: a Political Economy Theory and Evidence

Abstract: The extent of taxation and redistribution policy is generally determined as a political-economy equilibrium by a balance between those who gain from higher taxes/transfers and those who lose. In a stylized model of migration and human capital formation, we show -- somewhat against the conventi onal wisdom -- that low-skill immigration may lead to a lower tax burden and less redistribution than would be the case with no immigration, even though migrants (naturally) join the pro-tax/transfer coalition. Data on 11 European countries over the period 1974 to 1992 are consistent with the implications of the theory: a higher share of immigrants in the populati on leads to a lower tax rate on labor income, even after controlling for the gen erosity and size of the welfare state, demographics, and the international exposure of the economy. As predicted by the theory, it is the increased share of low education immigrants that leads to the smaller tax burden.

Human Capital and Social Capital: The Rise of Secondary Schooling in America, 1910 to 1940

Abstract: The United States led all other nations in the development of universal and publicly-funded secondary school education and much of the growth occurred from 1910 to 1940 The focus here is on the reasons for the high school movement' in American generally and why it occurred so early and swiftly in America's heartland - a region we dub the 'education belt' At the center of this belt' was the state of Iowa and we use information from the unique 1915 Iowa State Census to explore the factors, at both the county and individual levels, that propelled states like Iowa to embrace secondary school education very early Iowa's small towns, as well as those across the nation, were the loci of the high school movement In an analysis at the national level, we find that greater homogeneity of income or wealth, a higher level of wealth, greater community stability, and more ethnic and religious homogeneity fostered high school expansion from 1910 to 1930 The pecuniary returns to secondary school education were high - on the order of 12 percent per year in 1914 - providing substantial private incentives for high school attendance State-level measures of social capital today are strongly correlated with economic and schooling variables from 1900 to 1930 The social capital assembled locally in the early part of the century, which apparently fueled part of the high school movement, continues to contribute to human capital formation

General-Equilibrium Treatment Effects: A Study of Tuition Policy

Abstract: This paper defines and estimates general equilibrium treatment effects. The conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied. Focusing on the impact of tuition policy, and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation, we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects. The assumptions used to justify the LATE parameter in a partial equilibrium setting do not hold in a general equilibrium setting. Policy changes induce two way flows. We extend the LATE concept to a general equilibrium setting. We present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting.

The payoff to work without pay: volunteer work as an investment in human capital

Abstract: Despite the widespread belief that volunteer work enhances an individual's employment prospects, the hypothesis that volunteer work increases one's earnings has

The social process of undocumented border crossing among Mexican migrants.

Abstract: "In this article a theoretical model is developed that views undocumented border crossing as a well-defined social process influenced by the quantity and quality of human and social capital that migrants bring with them to the border, and constrained by the intensity and nature of U.S. enforcement efforts. Detailed histories of border crossing from undocumented migrants originating in 34 Mexican communities are employed to estimate equations corresponding to this model.... As people gain experience in border crossing, they rely less on the assistance of others and more on abilities honed on earlier trips, thus substituting migration-specific human capital for general social capital.... On all trips, the intensity of the U.S. enforcement effort has little effect on the likelihood of arrest, but INS involvement in drug enforcement sharply lowers the odds of apprehension."