Showing papers on "Human capital published in 2000"

A Treatise on the Family

Abstract: A Treatise on the Family. G. S. Becker. Cambridge, MA: Harvard University Press. 1981. Gary Becker is one of the most famous and influential economists of the second half of the 20th century, a fervent contributor to and expounder of the University of Chicago free-market philosophy, and winner of the 1992 Nobel Prize in economics. Although any book with the word "treatise" in its title is clearly intended to have an impact, one coming from someone as brilliant and controversial as Becker certainly had such a lofty goal. It has received many article-length reviews in several disciplines (Ben-Porath, 1982; Bergmann, 1995; Foster, 1993; Hannan, 1982), which is one measure of its scholarly importance, and yet its impact is, I think, less than it may have initially appeared, especially for scholars with substantive interests in the family. This book is, its title notwithstanding, more about economics and the economic approach to behavior than about the family. In the first sentence of the preface, Becker writes "In this book, I develop an economic or rational choice approach to the family." Lest anyone accuse him of focusing on traditional (i.e., material) economics topics, such as family income, poverty, and labor supply, he immediately emphasizes that those topics are not his focus. "My intent is more ambitious: to analyze marriage, births, divorce, division of labor in households, prestige, and other non-material behavior with the tools and framework developed for material behavior." Indeed, the book includes chapters on many of these issues. One chapter examines the principles of the efficient division of labor in households, three analyze marriage and divorce, three analyze various child-related issues (fertility and intergenerational mobility), and others focus on broader family issues, such as intrafamily resource allocation. His analysis is not, he believes, constrained by time or place. His intention is "to present a comprehensive analysis that is applicable, at least in part, to families in the past as well as the present, in primitive as well as modern societies, and in Eastern as well as Western cultures." His tone is profoundly conservative and utterly skeptical of any constructive role for government programs. There is a clear sense of how much better things were in the old days of a genderbased division of labor and low market-work rates for married women. Indeed, Becker is ready and able to show in Chapter 2 that such a state of affairs was efficient and induced not by market or societal discrimination (although he allows that it might exist) but by small underlying household productivity differences that arise primarily from what he refers to as "complementarities" between caring for young children while carrying another to term. Most family scholars would probably find that an unconvincingly simple explanation for a profound and complex phenomenon. What, then, is the salient contribution of Treatise on the Family? It is not literally the idea that economics could be applied to the nonmarket sector and to family life because Becker had already established that with considerable success and influence. At its core, microeconomics is simple, characterized by a belief in the importance of prices and markets, the role of self-interested or rational behavior, and, somewhat less centrally, the stability of preferences. It was Becker's singular and invaluable contribution to appreciate that the behaviors potentially amenable to the economic approach were not limited to phenomenon with explicit monetary prices and formal markets. Indeed, during the late 1950s and throughout the 1960s, he did undeniably important and pioneering work extending the domain of economics to such topics as labor market discrimination, fertility, crime, human capital, household production, and the allocation of time. Nor is Becker's contribution the detailed analyses themselves. Many of them are, frankly, odd, idiosyncratic, and off-putting. …

Social capital: implications for development theory, research, and policy

Abstract: In the 1990s the concept of social capital defined here as the norms and networks that enable people to act collectively enjoyed a remarkable rise to prominence across all the social science disciplines. The authors trace the evolution of social capital research as it pertains to economic development and identify four distinct approaches the research has taken : communitarian, networks, institutional, and synergy. The evidence suggests that of the four, the synergy view, with its emphasis on incorporating different levels and dimensions of social capital and its recognition of the positive and negative outcomes that social capital can generate, has the greatest empirical support and lends itself best to comprehensive and coherent policy prescriptions. The authors argue that a significant virtue of the idea of and discourse on social capital is that it helps to bridge orthodox divides among scholars, practitioners, and policymakers.

International Data on Educational Attainment Updates and Implications

Abstract: This paper presents a data set that improves the measurement of educational attainment for a broad group of countries. We extend our previous estimates of educational attainment for the population over age 15 and over age 25 up to 1995 and provide projections for 2000. We discuss the estimation method for the measures of educational attainment and relate our estimates to alternative international measures of human capital stocks.

Does Schooling Cause Growth

Abstract: A number of economists find that growth and schooling are highly correlated across countries. A model is examined in which the ability to build on the human capital of one's elders plays an important role in linking growth to schooling. The model is calibrated to quantify the strength of the effect of schooling on growth by using evidence from the labor literature on Mincerian returns to education. The upshot is that the impact of schooling on growth explains less than one-third of the empirical cross-country relationship. The ability of reverse causality to explain this empirical relationship is also investigated.

Understanding Productivity: Lessons from Longitudinal Microdata

Abstract: This paper reviews research that uses longitudinal microdata to document productivity movements and to examine factors behind productivity growth. The research explores the dispersion of productivity across firms and establishments, the persistence of productivity differentials, the consequences of entry and exit, and the contribution of resource reallocation across firms to aggregate productivity growth. The research also reveals important factors correlated with productivity growth, such as managerial ability, technology use, human capital, and regulation. The more advanced literature in the field has begun to address the more difficult questions of the causality between these factors and productivity growth.

Understanding productivity: lessons from longitudinal microdata

Abstract: This paper reviews research that uses longitudinal microdata to document productivity movements and to examine factors behind productivity growth. The research explores the dispersion of productivity across firms and establishments, the persistence of productivity differentials, the consequences of entry and exit, and the contribution of resource reallocation across firms to aggregate productivity growth. The research also reveals important factors correlated with productivity growth, such as managerial ability, technology use, human capital, and regulation. The more advanced literature in the field has begun to address the more difficult questions of the causality between these factors and productivity growth.

A Theory of Bank Capital

Abstract: Banks can create liquidity precisely because deposits are fragile and prone to runs. Increased uncertainty makes deposits excessively fragile, creating a role for outside bank capital. Greater bank capital reduces the probability of financial distress but also reduces liquidity creation. The quantity of capital influences the amount that banks can induce borrowers to pay. Optimal bank capital structure trades off effects on liquidity creation, costs of bank distress, and the ability to force borrower repayment. The model explains the decline in bank capital over the last two centuries. It identifies overlooked consequences of having regulatory capital requirements and deposit insurance. DOES BANK CAPITAL STRUCTURE MATTER, and if so, how should it be set? Most work on the subject extrapolates an answer from prior work on the capital structure of industrial firms. But bank assets and functions are not the same as those of industrial firms. In fact, one strand of the banking literature suggests banks have a role precisely because they do not suffer the asymmetric information costs of issuance faced by industrial firms (see Gorton and Pennacchi (1990)). Therefore, to really understand the determinants of bank capital structure, we should start by modeling the essential functions banks perform, and then ask what role capital plays. Using this approach, we can see that a bank's capital structure affects its liquiditycreation and credit-creation functions in addition to its stability. The consequent trade-offs imply an optimal bank capital structure. Because customers rely to different extents on liquidity and credit, bank capital structure also determines the nature of the bank's clientele. Our approach will help us better understand the impact of regulations such as minimum capital requirements, and also help suggest the consequences of different recapitalization policies in a banking crisis. We start by describing the functions a bank performs. Consider a world where a number of entrepreneurs each has a project in need of funding. Each entrepreneur has specific abilities vis 'a vis his project so that the cash flows he can generate exceed what anyone else can generate from it. An entrepreneur cannot commit his human capital to the project, except on a

Policies to Foster Human Capital

Abstract: This paper was given presented at the Aaron Wildavsky Forum, Richard and Rhoda Goldman School of Public Policy, University of California at Berkeley. The research reported here was supported by the National Science Foundation, the Russell Sage Foundation and the American Bar Foundation. Outline: Rising Wage Inequality - A Global Problem Linked To Trade and Technology Show Magnitudes of Problem 1.66 Trillion Cost To Restore U.S. to Previous Levels Tuition Subsidy Policy How to Combat This? Transfer Unpopular Skill enhancement is popular Another avenue is to subsidize work by the unskilled Think more broadly about tax/transfer policy Take the Long View Main Points of My Lecture Tonight About Skill Formation and Sources of Skill Formation in A Modern Economy Costly To Produce Skill Need to Recognize That Skill is Not Undimensional Recognize Diversity of Skill Motivation, IQ, Skill all matter but these are not the same thing. Need to Recognize the Life Cycle of Skill Production: Learning Begets Learning and Early Learning More Productive Than Later Learning: Not just because payoff is less for the late investor but also Because of synergies and Complementarity. Beyond A Certain Age and Stage in Life Cycle H.C. Investment Not Productive. Recognize Important Role of Families and Informal Sources of Skill "Social Planners" and professional educators equate skill with educational; what is produced in their institutions and what is measured by their tests; but in a broader definition of skill families play a much greater role (values; motivation) OJT is productive. Firms are highly productive sources of skill of Human Capital 25-50% of Human Capital Produce on the Job The Role of the Formal Overstated and Informal Context and Sources of Skills Understated. A Substantial Antimarket - Anti Choice Bias of Many Educational Planners Against Market and Competition - Yet The Evidence Strong Favors Competition in Provision of Education German Apprenticeship System // Data from U.S. Parental Preferences Peculiar World of High School and the Advantage of School to Work Programs Many Traditional Arguments Supporting Educational Interventions Greatly Overstated Evidence Against Short Term Liquidity Constraints Evidence that H.C. Should be Taxed More (At Least Within U.S. System) - Elimination of Progressive Taxes and Shift To A Consumption Tax and Making Tuition Deductible. Raises Physical Capital Accumulation and Raises Productivity and Wages Formal Schooling and Job Training both Private and Public Quality Effects Credit Constraints Wage Subsidies: Do They Work? Tax Policy Early Interventions and Donohue Siegelman Estimates Long View

The Human Capital Model

Abstract: This chapter contains a detailed treatment of the human capital model of the demand for health which was originally developed in 1972. Theoretical predictions are discussed, and theoretical extensions of the model are reviewed. Empirical research that tests the predictions of the model or studies causality between years of formal schooling completed and good health is surveyed. The model views health as a durable capital stock that yields an output of healthy time. Individuals inherit an initial amount of this stock that depreciates with age and can be increased by investment. The household production function model of consumer behavior is employed to account for the gap between health as an output and medical care as one of many inputs into its production. In this framework the “shadow price” of health depends on many variables besides the price of medical care. It is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education (years of formal schooling completed) if more educated people are more efficient producers of health. An important result is that, under certain conditions, an increase in the shadow price may simultaneously reduce the quantity of health demanded and increase the quantities of health inputs demanded.

You Can't Take It With You? Immigrant Assimilation and the Portability of Human Capital

Abstract: The national origin of an individual's human capital is a crucial determinant of its value. Education and labor market experience acquired abroad are significantly less valued than human capital obtained domestically. This difference can fully explain the earnings disadvantage of immigrants relative to comparable natives in Israel. Variation in the return to foreign schooling across origin countries may reflect differences in its quality and compatibility with the host labor market. The return to foreign experience is generally insignificant. Acquiring additional education following immigration appears to confer a compound benefit by raising the return to education acquired abroad.

Agglomeration economies, firm heterogeneity, and foreign direct investment in the United States

Abstract: An overlooked aspect of agglomeration economies, which are positive externalities that stem from the geographic clustering of industry, is that firms contribute to the externality in addition to benefiting from the externality. This insight suggests that if firms are heterogeneous they will differ in the net benefits they receive from agglomerating. We argue that firms with the best technologies, human capital, training programs, suppliers, or distributors will gain little, yet competitively suffer when their technologies, employees, and access to supporting industries spill over to competitors. Therefore, these firms have little motivation to geographically cluster despite the existence of agglomeration economies. Conversely, firms with the weakest technologies, human capital, training programs, suppliers, or distributors have little to lose and a lot to gain; therefore, these firms are motivated to geographically cluster. As a result, when firms are heterogeneous we expect agglomeration to be characterized by adverse selection. We find supportive evidence of these arguments by examining the location choice and survival of foreign greenfield investments in U.S. manufacturing industries. Copyright © 2000 John Wiley & Sons, Ltd.

Social capital : critical perspectives

Abstract: 1 Social capital: a review and critique 2 Civil society and democratic renewal 3 Social capital, the economy and education in historical perspective 4 Economic, social capital and the colonization of the social sciences 5 Socialising social capital: identity, the transition to work and economic development 6 Social capital, innovation and competitiveness 7 Refugees and social capital theory: social capital and social integration 8 Social capital trumping class and cultural capital? Engagement with school among immigrant youth 9 Social capital, schools and exclusions 10 Social capital and health: contextualizing health promotion within local community networks 11 Local social capital: making it work on the ground 12 Social capital and associational life 13 Human capital, social capital and collective intelligence 14 Social capital and human capital revisited

Is Child Labor Inefficient

Abstract: We build a model of child labor and study its implications for welfare. We assume that there is a trade‐off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully internalize its negative effects. This occurs when bequests are zero or when capital markets are imperfect. We also study the effects of a simple ban on child labor and derive conditions under which it may be Pareto improving in general equilibrium. We show that the implications of child labor for fertility are ambiguous.

The Middle Class Consensus and Economic Development

Abstract: A higher share of income for the middle class and lower ethnic polarization are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social modernization, and more democracy Modern political economy stresses society's polarization as a determinant of development outcomes Among the most common forms of social conflict are class polarization and ethnic polarization A middle class consensus is defined as a high share of income for the middle class and a low degree of ethnic polarization A middle class consensus distinguishes development successes from failures A theoretical model shows how groups - distinguished by class or ethnicity - will under-invest in human capital and infrastructure when there is leakage to another group Easterly links the existence of a middle class consensus to exogenous country characteristics such as resource endowments, along the lines of the provocative thesis of Engerman and Sokoloff 1997 that tropical commodity exporters are more unequal than other societies Easterly confirms this hypothesis with cross-country data This makes it possible to use resource endowments as instruments for inequality A higher share of income for the middle class and lower ethnic polarization are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social modernization, and more democracy This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to study the determinants of growth

Financial Capital, Human Capital, and the Transition to Self‐Employment: Evidence from Intergenerational Links

Abstract: We use data from the National Longitudinal Surveys to investigate the relative importance of family financial and human capital in the transition into self‐employment. Specifically, we estimate the impacts of individual's own wealth and human capital and parental wealth and self‐employment experience on the probability that an individual transits from wage‐and-salary to self‐employment. We find young men's own financial assets exert a statistically significant but quantitatively modest effect on the transition. In contrast, parents' capital exerts a large influence. Parents' strongest effect runs, not through financial means, but rather through their own self‐employment experience and business success.

The Health and Wealth of Nations

Abstract: Empirical studies show that health improvements provide a significant boost to economic growth in developing countries This leads to the view that health, like education, is a fundamental component of human capital, and suggests the notion of health-led growth Better health leads to higher income, but there is also a positive feedback effect, giving rise to a beneficial situation where health and income improvements are mutually reinforcing

Economic growth and social capital

Abstract: Recent interdisciplinary theoretical work has suggested that social capital, or the interpersonal trust of citizens, plays an important role in explaining both the efficiency of political institutions, and in the economic performance of contemporary societies. This paper examines the relationship between social capital and economic growth in a sample of thirty-four countries over the period 1970 to 1992, within the framework of a modified neo-classical model of economic growth. The findings suggest that social capital has an impact on growth which is at least as strong as that of human capital or education, which has been the focus of much of the recent work on endogenous growth theory. It appears to have about the same impact on growth as catch-up or the ability of poorer nations to adopt technological innovations pioneered by their richer counterparts.

A Cross-Country Empirical Investigation of the Aggregate Production Function Specification

Abstract: Many growth models assume that aggregate output is generated by a Cobb-Douglas production function. In this article we question the empirical relevance of this specification. We use a panel of 82 countries over a 28-year period to estimate a general constant-elasticity-of-substitution (CES) production function specification. We find that for the entire sample of countries we can reject the Cobb-Douglas specification. When we divide our sample of countries up into several subsamples, we find that physical capital and human capital adjusted labor are more substitutable in the richest group of countries and are less substitutable in the poorest group of countries than would be implied by a Cobb-Douglas specification.

Power Couples: Changes in the Locational Choice of the College Educated, 1940–1990

Abstract: College educated couples are increasingly located in large metropolitan areas. These areas were home to 32 percent of all college educated couples in 1940, 39 percent in 1970, and 50 percent in 1990. We investigate whether this trend can be explained by increasing urbanization of the college educated or the growth of dual career households and the resulting severity of the colocation problem. We argue that the latter explanation is the primary one. Smaller cities may therefore experience reduced inflows of human capital relative to the past and thus become poorer.

The Role of Financial Development in Growth and Investment

Abstract: Thisarticle decomposes the well-documented relationship between financialdevelopment and growth. We examine whether financial developmentaffects growth solely through its contribution to growth in ``primitives'' or factor accumulation rates or whether it alsohas a positive impact on total factor productivity growth. Ourresults suggest that indicators of financial development arecorrelated with both total factor productivity growth and investment.However, the indicators that are correlated with total factorproductivity growth differ from those that encourage investment.In addition, many of the results are sensitive to the inclusionof country fixed effects, which may indicate that the financialdevelopment indicators are proxying for broader country characteristics.

How Large are Human-Capital Externalities? Evidence from Compulsory-Schooling Laws

Abstract: Many economists and policymakers believe that education creates positive externalities. Indeed, average schooling in U.S. states is highly correlated with state wage levels, even after controlling for the direct effect of schooling on individual wages. We use variation in child labor laws and compulsory attendance laws over time and across states to investigate whether this relationship is causal. Our results show external returns to education around 1% and not significantly different from zero.

Social Capital and Civil Society

Abstract: Social capital is an instantiated informal norm that promotes cooperation between individuals. In the economic sphere it reduces transaction costs, and in the political sphere it promotes the kind of associational life that is necessary for the success of limited government and modern democracy. Although social capital often arises from iterated Prisoner’s Dilemma games, it also is a byproduct of religion, tradition, shared historical experience, and other types of cultural norms. Thus whereas awareness of social capital is often critical for understanding development, it is difficult to generate through public policy.

Industry‐Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics

Abstract: Using data from the National Longitudinal Survey of Youth (1979–96) and the Panel Study of Income Dynamics (1981–91), I seek to determine whether there is any net positive return to tenure with the current employer once we control for industry‐specific capital. Including total experience in the industry as an additional explanatory variable, I show that the return to seniority is markedly reduced using GLS while it virtually disappears using IV-GLS, at both the one‐digit and three‐digit levels. Therefore, it seems that what matters most for the wage profile in terms of human capital is industry‐specificity, not firm‐specificity.

The Governance of the New Enterprise

Abstract: The changing nature of the corporation forces us to re-examine much of what we take for granted in corporate governance. What precisely is the entity that is being governed? How does the governance system obtain power over it, and what determines the division of power between various stakeholders? And is the objective of allocating power only to enhance the returns of outside investors? In this paper we argue that, given the changing nature of the firm, the focus of corporate governance must shift from alleviating the agency problems between managers and shareholders to studying mechanisms that give the firm the power to provide incentives to human capital. We also provide some examples of the kind of subjects that should now be the main focus of study in corporate governance.(This abstract was borrowed from another version of this item.)