Showing papers on "Human capital published in 2001"

Direct and Moderating Effects of Human Capital on Strategy and Performance in Professional Service Firms: A Resource-Based Perspective

Abstract: The current study examines the direct and moderating effects of human capital on professional service firm performance. The results show that human capital exhibits a curvilinear (U-shaped) effect and the leveraging of human capital a positive effect on performance. Furthermore, the results show that human capital moderates the relationship between strategy and firm performance, thereby supporting a resource-strategy contingency fit. The results contribute to knowledge on the resource-based view of the firm and the strategic importance of human capital.

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 to 1995 for educational attainment for the population over ages 15 and 25. We also 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.

Education for Growth: Why and for Whom?

Abstract: This paper summarizes and tries to reconcile evidence from the microeconometric and empirical macro growth literatures on the effect of schooling on income and GDP growth Much microeconometric evidence suggests that education is an important causal determinant of income for individuals within countries At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth This discrepancy appears to be a result of the high rate of measurement error in first-differenced cross-country education data After accounting for measurement error, the effect of changes in educational attainment on income growth in cross-country data is at least as great as microeconometric estimates of the rate of return to years of schooling Another finding of the macro growth literature--that economic growth depends positively on the initial stock of human capital--is not robust when the assumption of a constant-coefficient model is relaxed

Human Capital and Growth

Abstract: This paper describes a growth model with the property that human capital accumulation can account for all observed growth. The model is shown to be consistent with evidence on individual productivities as measured by census earnings data. The central hypothesis is that we learn more when we interact with more productive people.

The Importance of Noncognitive Skills: Lessons from the GED Testing Program

Abstract: It is common knowledge outside of academic journals that motivation, tenacity, trustworthiness, and perseverance are important traits for success in life. Thomas Edison wrote that "genius is 1 percent inspiration and 99 percent perspiration." Most parents read the Aesop fable of the "Tortoise and The Hare" to their young children at about the same time they read them the story of "The Little Train That Could." Numerous instances can be cited of high-IQ people who failed to achieve success in life because they lacked self discipline and low-IQ people who succeeded by virtue of persistence, reliability, and self-discipline. The value of trustworthiness has recently been demonstrated when market systems were extended to Eastern European societies with traditions of corruption and deceit. It is thus surprising that academic discussions of skill and skill formation almost exclusively focus on measures of cognitive ability and ignore noncognitive skills. The early literature on human capital (e.g. Gary Becker, 1964) contrasted cognitive-ability models of earnings with human capital models, ignoring noncognitive traits entirely. The signaling literature (e.g., Michael Spence, 1974), emphasized that education was a signal of a one-dimensional ability, usually interpreted as a cognitive skill. Most discussions of ability bias in the estimated return to education treat omitted ability as cognitive ability and attempt to proxy the missing ability by cognitive tests. Most assessments of school reforms stress the gain from reforms as measured by the ability of students to perform on a standardized achievement test. Widespread use of standardized achievement and ability tests for admissions and educational evaluation are premised on the belief that the skills that can be tested are essential for success in schooling, a central premise of the educational-testing movement since its inception. Much of the neglect of noncognitive skills in analyses of earnings, schooling, and other lifetime outcomes is due to the lack of any reliable measure of them. Many different personality and motivational traits are lumped into the category of noncognitive skills. Psychologists have developed batteries of tests to measure noncognitive skills (e.g., Robert Sternberg, 1985). These tests are used by companies to screen workers but are not yet used to ascertain college readiness or to evaluate the effectiveness of schools or reforms of schools. The literature on cognitive tests ascertains that one dominant factor ("g") summarizes cognitive tests and their effects on outcomes. No single factor has yet emerged to date in the literature on noncognitive skills, and it is unlikely that one will ever be found, given the diversity of traits subsumed under the category of noncognitive skills. Studies by Samuel Bowles and Herbert Gintis (1976), Rick Edwards (1976), and Roger Klein et al. (1991) demonstrate that job stability and dependability are traits most valued by employers as ascertained by supervisor ratings and questions of employers although they present no direct evidence on wages and educational t Discussants: Susan Mayer, University of Chicago; Cecilia Rouse, Princeton University; Nan Maxwell, California State University-Hayward; Janet Currie, University of California-Los Angeles.

How to Compete: The Impact of Workplace Practices and Information Technology on Productivity

Abstract: Using data from a unique nationally representative sample of businesses, we examine the impact of workplace practices, information technology, and human capital investments on productivity. We estimate an augmented Cobb-Douglas production function with both cross section and panel data covering the period of 1987–1993, using both within and GMM estimators. We find that it is not whether an employer adopts a particular work practice but rather how that work practice is actually implemented within the establishment that is associated with higher productivity. Unionized establishments that have adopted human resource practices that promote joint decision making coupled with incentive-based compensation have higher productivity than other similar nonunion plants, whereas unionized businesses that maintain more traditional labor management relations have lower productivity. Finally, plant productivity is higher in businesses with more-educated workers or greater computer usage by nonmanagerial employees.

The Economic Approach to Social Capital

Abstract: To identify the determinants of social capital formation, it is necessary to understand the social capital investment decision of individuals. Individual social capital should then be aggregated to measure the social capital of a community. This paper assembles the evidence that supports the individual-based model of social capital formation, including seven facts: (l) the relationship between social capital and age is first increasing and then decreasing, (2) social capital declines with expected mobility, (3) social capital investment is higher in occupations with greater returns to social skills, (4) social capital is higher among homeowners, (5) social connections fall sharply with physical distance, (6) people who invest in human capital also invest in social capital, and (7) social capital appears to have interpersonal complementarities.

Managing organizational knowledge by diagnosing intellectual capital: framing and advancing the state of the field

Abstract: Since organizational knowledge is at the crux of sustainable competitive advantage, the burgeoning field of intellectual capital is an exciting area for both researchers and practitioners. Intellectual capital is conceptualized from numerous disciplines making the field a mosaic of perspectives. Accountants are interested in how to measure it on the balance sheet, information technologists want to codify it on systems, sociologists want to balance power with it, psychologists want to develop minds because of it, human resource managers want to calculate an ROI on it, and training and development officers want to make sure that they can build it. The following article represents a comprehensive literature review from a variety of managerial disciplines. In addition to highlighting the research to date, avenues for future pursuit are also offered.

The School-to-Work Transition: A Cross-National Perspective

Abstract: School-to-work patterns and issues are discussed for seven economies (France, Germany, Japan, the Netherlands, Sweden, the United Kingdom, and the United States). The emphasis is placed on differences across countries in the current labor market position of young people and recent trends therein, along with the institutions that regulate youth education, training, and employment. The power of public policies--including labor market deregulation, labor market programs, vocationalization of education, and apprenticeship--to improve youth outcomes is discussed, drawing on national evaluation literatures. Evidence of extensive policy failure points up the need to develop nationally appropriate institutions to improve school-to-work transitions

Voluntary Turnover, Social Capital, and Organizational Performance

Abstract: We propose a supplemental perspective, based on organizational social capital, for examining the voluntary turnover-organizational performance relationship. We view existing organizational-level theories as those focusing on cost or human capital issues or, rarely, on a balance among these factors. But rapid changes in the nature of work, organizational structures, and interorganizational competitiveness increase the importance of studying the role of social capital in the voluntary turnover-organizational performance relationship. We highlight areas of correspondence and divergence among the various perspectives, discuss implications for various performance measures, and outline several research directions.

Bundling Human Capital with Organizational Context: The Impact of International Assignment Experience on Multinational Firm Performance and CEO Pay

Abstract: We develop resource- and dynamic capability-based arguments that CEOs with international assignment experience create value for their firms and themselves through their control of a valuable, rare,...

The well-being of nations : the role of human and social capital

Abstract: This report argues that the role of human capital in the economic and social development of nations is commonly acknowledged although its exact effects are still in dispute. Recently, increasing attention has been focused on the role of social capital or the role of social relationships and individual abilities in economic activity and social well-being. The report has three main purposes: (1) to describe the current evidence on investment in human capital and its role in economic growth and social well-being; (2) to describe and clarify the new concept of social capital; and (3) to identify the roles of human and social capital in achieving sustainable economic and social development. The chapters are: Emerging social and economic concerns; The evidence on human capital; The evidence on social capital; Policy implications and further research needs. Appendices: Some measures of well-being; Some trends in the social and economic environments; Determinants of school attainment: the research evidence; The impact of human capital on economic growth: some major studies; Are trust and civic engagement declining in OECD countries?

World development report 2002 - building institutions for markets

Abstract: The World Development Report (WDR) 2002 is about building market institutions that promote growth and reduce poverty, addressing how institutions support markets, what makes institutions work, and how to build them. This theme is a natural a natural continuation of the WDR 2000/01, which discussed the central role of markets in the lives of poor people, leaving important issues for the WDR 2003, which will focus on the development of human, natural, and environmental capital. This report emphasizes on building institutions to support the development of markets, and its main messages address supplying effective institutions, and creating the demand for them, through: a design that complements institutions, human capabilities, and available technologies; innovations that identify institutional successes, and weaknesses, by experimenting with, and recognizing local conditions, and differences, ranging from social norms, to geography; a connection of communities of market players, by opening information flows, and trade; and, the promotion of competition among jurisdictions, firms, and individuals. The report is an introspective analysis about how do institutions support markets, growth, and poverty reduction, defining institutional work as a channel of information about market conditions, goods, and participants; as a mean to enforce property rights, and contracts; and, as a tool to increase competition in markets. The report offers lessons derived from experience in institutional evolution, and, although it does not address all possible institutional problems, it does focus on sets of institutions from many fields, to show that the framework, and messages can be applied regardless of the sector.

Does foreign direct investment promote economic growth? evidence from east asia and latin america

Abstract: Although there is considerable evidence on the link between foreign direct investment (FDI) and economic growth in developing countries, causal patterns of the two variables has not been investigated yet with a reliable procedure. This article provides an empirical assessment of the issue by using data for 11 economies in East Asia and Latin America. Although FDI is expected to boost host economic growth, it is shown that the extent to which FDI is growth-enhancing appears to depend on country-specific characteristics. Particularly, FDI tends to be more likely to promote economic growth when host countries adopt liberalized trade regime, improve education and thereby human capital conditions, encourage export-oriented FDI, and maintain macroeconomic stability.

Cross-Country Technology Diffusion: The Case of Computers

Abstract: We use data on imports of computer equipment for a large sample of countries between 1 970 and 1990 to investigate the determinants of computer-technology adoption. We find strong evidence that computer adoption is associated with higher levels of human capital and with manufacturing trade openness vis-a-vis the OECD. We also find evidence that computer adoption is enhanced by high investment rates, good property rights protection, and a small share of agriculture in GDP. Finally, there is some evidence that adoption is reduced by a large share of government in GDP, and increased by a large share of manufacturing. After controlling for the above-mentioned variables, we do not find an independent role for the English- (or European-) language skills of the population.

Complementarities in Innovation Policy

Abstract: This Paper develops a framework for testing discrete complementarities in innovation policy using European data on obstacles to innovation. We propose a discrete test of supermodularity in innovation policy leading to a number of inequality constraints. We apply our test to two types of innovation decisions: to innovate or not, and if so, by how much. We find that industries display a considerable amount of complementarity, with some industries being complementary across all obstacles. We also find that the lack of internal human capital (skilled personnel) is complementary to all the other obstacles in almost all industries. In this sense, our results suggest that internal human capital is key to any innovation policy, insofar that it is complementary to all the other factors that might hamper innovation activities.

Optimal Portfolio Choice for Long‐Horizon Investors with Nontradable Labor Income

Abstract: This paper examines how risky labor income and retirement affect optimal portfolio choice. With idiosyncratic labor income risk, the optimal allocation to stocks is unambiguously larger for employed investors than for retired investors, consistent with the typical recommendations of investment advisors. Increasing idiosyncratic labor income risk raises investors' willingness to save and reduces their stock portfolio allocation towards the level of retired investors. Positive correlation between labor income and stock returns has a further negative effect and can actually reduce stockholdings below the level of retired investors. FINANCIAL ADVISORS TYPICALLY RECOMMEND that their customers invest more in stocks than in safe assets when they are working, and to shift their investments towards safe assets when they retire (Jagannathan and Kocherlakota (1996), Malkiel (1996)). By contrast, the standard academic models of portfolio choice (Merton (1969, 1971), Samuelson (1969)) show that retirement is irrelevant for portfolio decisions if investment opportunities are constant and human capital is tradable. In this case the fraction of wealth optimally invested in risky assets should be constant over the lifetime of an individual. Recent research, building on the pioneering work by Merton (1971), shows that time-varying investment opportunities result in portfolio rules with an intertemporal hedging component whose magnitude depends on the investment horizon of the investor (Kim and Omberg (1996), Balduzzi and Lynch (1997), Brennan, Schwartz, and Lagnado (1997), Brandt (1999), Campbell and Viceira (1999, 2001), Barberis (2000)). With time variation in investment opportunities, retirement and death play an instrumental role as events that exogenously fix the individual's investment horizon. More importantly, retirement also marks the time at which individuals stop working and thereafter must live off their lifetime savings and (possibly) transfers. From this perspective, retirement matters for portfolio choice

Human Well-Being and the Natural Environment

Abstract: In Human Well-Being and the Natural Environment, Partha Dasgupta explores ways to measure the quality of life. Although the problem pervades a number of academic disciplines, it is not confined to the academic realm. International organizations regularly publish cross-country estimates of the quality of life, journalists and commentators publicize them, and national governments are obliged to take note of them. Today, quality-of-life indices broker political arguments and together form a coin that even helps purchase economic and social policy. It is therefore ironic that indices of human well-being in current use are notably insensitive to our dependence on the natural environment, both at a moment in time and across generations. Moreover, international discussions on economic development in poor regions all too frequently ignore the natural resource base. In developing quality-of-life measures, Professor Dasgupta pays particular attention to the natural environment, illustrating how it can be incorporated, more generally, into economic reasoning in a seamless manner. The result is a treatise that goes beyond quality-of-life measures and offers a comprehensive account of the newly emergent subject of ecological economics. The connections between biodiversity, ecosystem services, resource scarcities, and economic possibilities for the future are developed in a quantitative, but accessible, language. Such familiar terms as 'sustainable development', 'social discount rates', and Earth's 'carrying capacity' are given a firm theoretical underpinning. The theory that is developed is then put to use in extended commentaries on the economics of population, poverty traps, global warming, structural adjustment programmes, and free trade. The author shows that, whether we are interested in valuing the state of affairs in a country or in evaluating economic policy there, the index that should be used is the economy's wealth, which is the social worth of its capital assets. The concept of wealth adopted here is a comprehensive one, including not only manufactured assets, but also human capital, knowledge, and the natural environment. Wealth is contrasted with such popular measures of human well-being as gross national product and the United Nations Development Programme's Human Development Index. Although the theory developed here is not restricted in its applicability to the circumstances facing poor countries, the exposition is prompted by the author's concerns over the dilemmas facing poor people in those parts of world. Repeatedly, he applies the theory to data on poor countries. The picture that emerges is a sobering one and contrasts sharply with that portrayed in the contemporary literature on economic development. The book has been written not only for fellow economists, but also for students of economics, environmental studies, political science, and political philosophy. It is intended even more broadly for the general citizen interested in human well-being and the centrality of the natural environment to our everyday lives. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0199247889/toc.html

Social capital and international migration: a test using information on family networks.

Abstract: This article uses a multistate hazard model to test the network hypothesis of social capital theory. The effects of family network ties on individual migration are estimated while controlling for measured and unmeasured conditions that influence migration risks for all family members. Results suggest that social network effects are robust to the introduction of controls for human capital, common household characteristics, and unobserved conditions. Estimates also confirm the ancillary hypothesis, which states that diffuse social capital distributed among community and household members strongly influences the likelihood of out‐migration, thus validating social capital theory in general and the network hypothesis in particular.

The effect of parental transfers and borrowing constraints on educational attainment

Abstract: A strong positive association between one’s school attainment and that of one’s parents has been consistently documented in numerous empirical studies.2 The underlying cause of this intergenerational correlation has been the subject of contentious debate in the social sciences for many years. Two competing types of explanations are prominent. The first is based on the heritability of traits, that is, that children of more educated parents may inherit the abilities, personalities, and preferences that led to the higher educational achievement of their parents. The second type of explanation is based on human capital production, namely that more educated parents, due to their own preferences for more educated children and/or due to their higher wealth, may invest more heavily in their children’s human capital. Human capital investments in children take many forms, such as parental time (e.g., reading to young children), the purchase of market goods that are complementary to learning (e.g., books), or direct financial subsidies (e.g., in the form of college tuition payments). In this article, we focus on the decision process of young adults (beginning at age 16) for whom parental subsidies (monetary and in-kind transfers) to postsecondary education are likely to be the most salient of parental human capital investments. A central question we ask is: To what extent and through what mechanisms do differences in parental transfer behavior account for the positive intergenerational correlation in educational attainment? The importance of parental transfers in the postsecondary educational decisions of their children may be affected by the degree to which young adults have access to capital markets as a means of financing postsecondary educational expenditures. Thus, a second key question we address concerns the extent to which borrowing constraints, i.e., restrictions on the availability of uncollateralized loans, affect educational attainment. Clearly, if borrowing constraints are binding, then youths from families with

Cross-country technology diffusion: the case of computers

Abstract: We use data on imports of computer equipment for a large sample of countries between 1970 and 1990 to investigate the determinants of computer technology adoption. We find strong evidence that computer adoption is associated with higher levels of human capital and with manufacturing trade openness vis-a-vis the OECD. We also find evidence that computer adoption is enhanced by high investment rates, good property rights protection, and a small share of agriculture in GDP. Finally, there is some evidence that adoption is reduced by a large share of government in GDP, and increased by a large share of manufacturing. After controlling for the above mentioned variables, we do not find an independent role for the English (or European) language skills of the population.

Safety in numbers: Downsizing and the deinstitutionalization of permanent employment in Japan

Abstract: This study examines the role of downsizing in the deinstitutionalization of permanent employment among publicly listed companies in Japan between 1990 and 1997. We found that although economic pressure triggered downsizing, social and institutional pressures shaped the pace and process by which downsizing spread. Large, old, wholly domestically owned, and high-reputation Japanese firms were resistant to downsizing at first, as were firms with high levels of human capital, as reflected by high wages, but these social and institutional pressures diminished as downsizing spread across the population. We argue that this breakdown of social constraints was due to a safety-in-numbers effect: as downsizing became more prominent, the actions of any single firm were less likely to be noticed and criticized, and the effect of the institutional factors that once constrained downsizing diminished.

Scientific and technical human capital: an alternative model for research evaluation

Abstract: We provide an alternative model for evaluating science and technology projects and programs. Our approach, a "scientific and technical human capital" (S&T human capital) model, gives less attention to the discrete products and immediate outcomes from scientific projects and programs - the usual focus of evaluations - and more attention to scientists' career trajectories and their sustained ability to contribute and enhance their capabilities. S&T human capital encompasses not only the individual human capital endowments but also researchers' tacit knowledge, craft knowledge, and know-how. S&T human capital further includes the social capital that scientists continually draw upon in creating knowledge - for knowledge creation is neither a solitary nor singular event. In sum, it is this expanded notion of human capital when paired with a productive social capital network that enables researchers to create and transform knowledge and ideas in ways that would not be possible without these resources. We review literature contributing to an S&T human capital model and consider some of the practical data and measurement issues entailed in implementing such an approach.