Showing papers on "Human capital published in 2009"

Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education

Abstract: "Human Capital" is Becker's study of how investment in an individual's education and training is similar to business investments in equipment. Becker looks at the effects of investment in education on earnings and employment, and shows how his theory measures the incentive for such investment, as well as the costs and returns from college and high school education. Another part of the study explores the relation between age and earnings. This edition includes four new chapters, covering recent ideas about human capital, fertility and economic growth, the division of labour, economic considerations within the family, and inequality in earnings.

Conditional cash transfers : reducing present and future poverty

Abstract: Conditional cash transfers (CCTs) are programs that transfer cash, generally to poor households, on the condition that those households make pre specified investments in the human capital of their children. The report shows that there is good evidence that CCTs have improved the lives of poor people. Transfers generally have been well targeted to poor households, have raised consumption levels, and have reduced poverty, by a substantial amount in some countries. Offsetting adjustments that could have blunted the impact of transfers, such as reductions in the labor market participation of beneficiaries, have been relatively modest. The report also considers the rationale for conditioning the transfers on the use of specific health and education services by program beneficiaries. Thus CCTs have increased the likelihood that households will take their children for preventive health checkups, but that has not always led to better child nutritional status; school enrollment rates have increased substantially among program beneficiaries, but there is little evidence of improvements in learning outcomes. These findings suggest that to maximize their potential effects on the accumulation of human capital, CCTs should be combined with other programs to improve the quality of the supply of health and education services, and should provide other supporting services.

The graduate attributes we’ve overlooked: enhancing graduate employability through career management skills

Abstract: Recent shifts in education and labour market policy have resulted in universities being placed under increasing pressure to produce employable graduates. However, contention exists regarding exactly what constitutes employability and which graduate attributes are required to foster employability in tertiary students. This paper argues that in the context of a rapidly changing information- and knowledge-intensive economy, employability involves far more than possession of the generic skills listed by graduate employers as attractive. Rather, for optimal economic and social outcomes, graduates must be able to proactively navigate the world of work and self-manage the career building process. A model of desirable graduate attributes that acknowledges the importance of self-management and career building skills to lifelong career management and enhanced employability is presented. Some important considerations for the implementation of effective university career management programs are then outlined.

Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation

Abstract: We provide evidence that the robust association between cognitive skills and economic growth reflects a causal effect of cognitive skills and supports the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth that are complementary to each other, and the high-performer effect is larger in poorer countries.

Psychological capital: A positive resource for combating employee stress and turnover

Abstract: Workplace stress is a growing concern for human resource managers. Although considerable scholarly and practical attention has been devoted to stress management over the years, the time has come for new perspectives and research. Drawing from the emerging field of positive organizational behavior, this study offers research findings with implications for combating occupational stress. Specifically, data from a large sample of working adults across a variety of industries suggest that psychological capital (the positive resources of efficacy, hope, optimism, and resilience) may be key to better understanding the variation in perceived symptoms of stress, as well as intentions to quit and job search behaviors. The article concludes with practical strategies aimed at leveraging and developing employees' psychological capital to help them better cope with workplace stress. © 2009 Wiley Periodicals, Inc.

Was Weber Wrong? A Human Capital Theory of Protestant Economic History

Abstract: Max Weber attributed the higher economic prosperity of Protestant regions to a Protestant work ethic. We provide an alternative theory: Protestant economies prospered because instruction in reading the Bible generated the human capital crucial to economic prosperity. We test the theory using county-level data from late-nineteenth-century Prussia, exploiting the initial concentric dispersion of the Reformation to use distance to Wittenberg as an instrument for Protestantism. We find that Protestantism indeed led to higher economic prosperity, but also to better education. Our results are consistent with Protestants' higher literacy accounting for most of the gap in economic prosperity.

Culture: an empirical investigation of beliefs, work, and fertility

Abstract: We study the effect of culture on important economic outcomes by using the 1970 census to examine the work and fertility behavior of women born in the U.S. but whose parents were born elsewhere. We use past female labor force participation and total fertility rates from the country of ancestry as our cultural proxies. These variables should capture, in addition to past economic and institutional conditions, the beliefs commonly held about the role of women in society (i.e., culture). Given the different time and place, only the beliefs embodied in the cultural proxies should be potentially relevant. We show that these cultural proxies have positive and significant explanatory power for individual work and fertility outcomes, even after controlling for possible indirect effects of culture. We examine alternative hypotheses for these positive correlations and show that neither unobserved human capital nor networks are likely to be responsible.

Occupational specificity of human capital

Abstract: We find that returns to occupational tenure are substantial. Everything else being constant, 5 years of occupational tenure are associated with an increase in wages of 12%–20%. Moreover, when occupational experience is taken into account, tenure with an industry or employer has relatively little importance in accounting for the wage one receives. This finding is consistent with human capital being occupation specific.

Intellectual Capital Architectures and Ambidextrous Learning: A Framework for Human Resource Management

Abstract: Both researchers and managers are increasingly interested in how firms can pursue ambidextrous learning; that is, simultaneously exploring new knowledge domains while exploiting current ones. Ambidextrous learning is derived from intellectual capital architectures that underlie unique configurations of human, social, and organizational capital. We identified two distinctive architectures of intellectual capital that facilitate ambidextrous learning. Refined interpolation is an architecture comprised of specialist human capital supplemented by cooperative social capital, and complemented by organic organizational capital. Disciplined extrapolation is an architecture comprised of generalist human capital, supplemented by entrepreneurial social capital, and complemented by mechanistic organizational capital. As organization contexts to support these architectures, we have also identified two alternative HR configurations that facilitate ambidextrous learning. One HR configuration combines job or function-based development, ILM-based employee relations, and error embracing performance/control systems to support refined interpolation. The other HR configuration combines skill-based development, market-based employee relations, and error avoiding performance/control systems to support disciplined extrapolation. Our framework may provide valuable theoretical implications for HRM systems regarding the issues of internal fits and best configurations.

The Economics of Growth

Abstract: This comprehensive introduction to economic growth presents the main facts and puzzles about growth, proposes simple methods and models needed to explain these facts, acquaints the reader with the most recent theoretical and empirical developments, and provides tools with which to analyze policy design. The treatment of growth theory is fully accessible to students with a background no more advanced than elementary calculus and probability theory; the reader need not master all the subtleties of dynamic programming and stochastic processes to learn what is essential about such issues as cross-country convergence, the effects of financial development on growth, and the consequences of globalization. The book, which grew out of courses taught by the authors at Harvard and Brown universities, can be used both by advanced undergraduate and graduate students, and as a reference for professional economists in government or international financial organizations. The Economics of Growth first presents the main growth paradigms: the neoclassical model, the AK model, Romer's product variety model, and the Schumpeterian model. The text then builds on the main paradigms to shed light on the dynamic process of growth and development, discussing such topics as club convergence, directed technical change, the transition from Malthusian stagnation to sustained growth, general purpose technologies, and the recent debate over institutions versus human capital as the primary factor in cross-country income differences. Finally, the book focuses on growth policies—analyzing the effects of liberalizing market competition and entry, education policy, trade liberalization, environmental and resource constraints, and stabilization policy—and the methodology of growth policy design. All chapters include literature reviews and problem sets. An appendix covers basic concepts of econometrics.

Gender differences in business performance: evidence from the Characteristics of Business Owners survey

Abstract: Using confidential microdata from the U.S. Census Bureau, we investigate the performance of female-owned businesses, making comparisons to male-owned businesses. Using regression estimates and a decomposition technique, we explore the role that human capital, especially through prior work experience, and financial capital play in contributing to why female-owned businesses have lower survival rates, profits, employment, and sales. We find that female-owned businesses are less successful than male-owned businesses because they have less startup capital, less business human capital acquired through prior work experience in a similar business, and less prior work experience in a family business. We also find some evidence that female business owners work fewer hours and may have different preferences for the goals of their businesses, which may have implications for business outcomes.

Evaluating the impacts of human capital stocks and accumulation on economic growth: some new evidence.

Abstract: Various hypotheses have been put forward in recent years concerning the contribution of human capital to economic growth. This paper argues that school enrolment rates — by far the most commonly used human capital measure in growth regressions attempting to test these hypotheses — conflate human capital stock and accumulation effects and lead to misinterpretations of the role of labour force growth. An alternative educationrelated human capital measure is constructed which is capable of distinguishing between stocks and flows. Applying this measure to samples of developed and less developed countries during the 1960–85 period suggests not only that there are important growth effects associated both with ‘initial’ stocks of, and subsequent growth in, human capital, but also that this new measure out-performs the simple school enrolment rates used in previous analyses.

Demographic Change and Economic Growth in Asia

Abstract: Trade openness, high savings rates, human capital accumulation, and macroeconomic policy only accounted for part of the 1965‐1990 growth performance in East Asia. Subsequently, demographic change was shown to be a missing factor in explaining the East Asian growth premium. Since 1990, East Asia has undertaken major economic reforms in response to financial crises and other factors. We reexamine the role of the demographic transition in contributing to cross-country differences in economic growth through to 2005, with a particular focus on East Asia. We highlight the need for policy to offset potential negative effects of aging populations in the future.

Skill-relatedness and firm diversification

Abstract: According to the knowledge-based view of the firm, a firm’s workforce is its most important resource, and firms often diversify into activities that allow them to leverage human resources. Human capital also represents a main asset for employees. When switching jobs, individuals are expected to remain in industries that value the skills that they have developed in their previous work. Based on this observation, this article develops theoretical arguments and a statistical method that uses cross-industry labor flows to assess the skill-relatedness between industries. Industries classified in different sectors of the economy sometimes exhibit strong skill-relatedness linkages. Also, industry space, i.e., the resulting network that connects industries with overlapping skill requirements, is highly predictive of diversification moves on the part of firms. Diversification is found to be over 100 times more likely to occur into industries that have ties to a firm’s core activity in terms of skills than into industries that do not. This effect of skill-relatedness eclipses the effect of other types of relatedness, such as value chain linkages and classification-based relatedness.

Firm-specific knowledge resources and competitive advantage: the roles of economic- and relationship-based employee governance mechanisms

Abstract: The resource-based view of the firm emphasizes the role of firm-specific resources, especially firm-specific knowledge resources, in helping a firm to achieve sustainable competitive advantage. However, the deployment of firm-specific knowledge often requires key employees to make specialized human capital investments that are not easily redeployable to other settings. Thus, in the absence of effective safeguards and trust building devices, employees with foresight may be reluctant to make such specialized investments. This study explores both economic- and relationship-based governance mechanisms that might mitigate this underinvestment problem. Effective use of these governance mechanisms enables a firm to obtain greater performance from its efforts to deploy firm-specific knowledge resources. Empirical results further support these key arguments. Copyright © 2009 John Wiley & Sons, Ltd.

Human Capital, the Structure of Production and Growth

Abstract: We document that countries with higher initial education levels experienced faster value-added and employment growth in schooling-intensive industries in the 1980s and 1990s. This effect is robust to controls for other determinants of international specialization and becomes stronger when we focus on economies open to international trade. Our finding is consistent with schooling fostering the adoption of new technologies if such technologies are skilled-labor augmenting, as was the case in the 1980s and the 1990s. In line with international specialization theory, we also find that countries where education levels increased rapidly experienced stronger shifts in production toward schooling-intensive industries.

Do Population Control Policies Induce More Human Capital Investment? Twins, Birthweight, and China’s ‘One Child’ Policy

Abstract: In this paper, we address the issues of whether reductions in fertility increase human capital investments per child and whether twinning can identify the quantity—quality (Q-Q) trade-off. We show that estimates of the effects of twinning at higher parities on the outcomes of older children in prior studies do not identify family-size effects but are confounded by inter-child allocation effects because of the endowment deficit and close spacing of twins. However, examining the effects of twinning by birth order, net of the effects stemming from the endowment deficit of twins, can provide upper and lower bounds on the trade-off between the family size and average child quality. Our estimates, based on data from China, indicate that an extra child at parity one or at parity two, net of one component of birth-endowment effects associated with birth weight, significantly decreases the schooling progress, the expected college enrolment, grades in school and the assessed health of all children in the family. Despite the evident significant trade-off between number of children and child quality in China, the findings suggest that the contribution of the one-child policy in China to the development of its human capital was modest. Copyright , Wiley-Blackwell.

Occupational Mobility and Wage Inequality

Abstract: In this article we argue that wage inequality and occupational mobility are intimately related. We are motivated by our empirical findings that human capital is occupation specific and that the fraction of workers switching occupations in the U.S. was as high as 16% a year in the early 1970's and had increased to 21% by the mid-1990's. We develop a general equilibrium model with occupation-specific human capital and heterogeneous experience levels within occupations. We find that the model, calibrated to match the level of occupational mobility in the 1970's, accounts quite well for the level of (within-group) wage inequality in that period. Next, we find that the model, calibrated to match the increase in occupational mobility, accounts for over 90% of the increase in wage inequality between the 1970's and the 1990's. The theory is also quantitatively consistent with the level and increase in the short-term variability of earnings. Copyright , Wiley-Blackwell.

Firm-Specific Human Capital: A Skill-Weights Approach

Abstract: The theory of human capital is agnostic on what constitutes firm‐specific skills. The theory specifies that specific skills contribute to productivity only at the current firm. A broader approach lets all skills be general, but firms use them with different weights attached. For example, computer programming, economics, and accounting are general skills, but there may be only one firm that wants workers trained in all three. One implication is that wage profiles and the split of human capital costs depend on thickness of the market. Another is that firms pay for what appears to be general training.

Creative Class and Regional Growth: Empirical Evidence from Seven European Countries

Abstract: This article analyzes the regional distribution and economic effect of the “creative class” on the basis of a unique data set that covers more than 500 regions in 7 European countries. The creative class is unevenly geographically distributed across Europe; the analyses show that a regional climate of tolerance and openness has a strong and positive effect on a region’s share of these people. Regional job opportunities also have a large effect on the size of a region’s population of the creative class. The findings reveal some evidence of a positive relationship among creative class occupation, employment growth, and entrepreneurship at the regional level in a number of European countries. On the basis of the analysis, however, it is not clear whether human capital, measured by creative occupation, outperforms indicators that are based on formal education, or if formal education has the stronger effect.

Pre-Entry Knowledge, Learning, and the Survival of New Firms

Abstract: New firms are endowed with knowledge and experience at birth through the human capital of their founder(s). Existing empirical research suggests that this pre-entry knowledge and experience will influence the firm's chances of survival; however, the mechanisms underlying this relationship have yet to be investigated. We seek to better understand and unpack this relationship. Specifically, we study the extent to which a founder's pre-entry knowledge of the business activity and pre-entry management experience influence the effectiveness of two subsequent learning activities---namely, early-stage business planning and product-line change. Our findings suggest that pre-entry knowledge and management experience increase firm survival through moderating the effects of these subsequent learning activities. We also find that learning activities are not always beneficial; in our sample, early-stage business planning is associated with decreased firm survival, and product line change is associated with increased firm survival. We examine these patterns using survey data collected from 436 individuals in the Munich region who founded their own firms as an alternative to continued unemployment. Our results have theoretical implications for the entrepreneurship, evolutionary economics, and organizational learning literatures.

From resource base to dynamic capabilities : an investigation of new firms

Abstract: Despite the numerous observations that dynamic capabilities lie at the source of competitive advantage, we still have limited knowledge as to how access to firm-based resources and changes to these affect the development of dynamic capabilities. In this paper, we examine founder human capital, access to employee human capital, access to technological expertise, access to other specific expertise, and access to two types of tangible resources in a sample of new firms in Sweden. We empirically measure four dynamic capabilities and find that the nature and effect of resources employed in the development of these capabilities vary greatly. For the most part, there are positive effects stemming from access to particular resources. However, for some resources, such as access to employee human capital and access to financial capital, unexpected negative effects also appear. This study therefore provides statistical evidence as to the varying role of resources in capability development. Importantly, we also find that changes in resource bases have more influential roles in the development of dynamic capabilities than the resource stock variables that were measured at an earlier stage of firm development. This provides empirical support for the notion of treating the firm as a dynamic flow of resources as opposed to a static stock. This finding also highlights the importance of longitudinal designs in studies of dynamic capability development. Further recommendations for future empirical studies of dynamic capabilities are presented.

FDI, Productivity and Financial Development

Abstract: This paper examines the effect of foreign direct investment (FDI) on growth Factor accumulation - physical and human capital - does not seem to be the main channel through which countries benefit f rom FDI. Instead, we f ind that countries with well-developed financial markets gain significantly

Smart cities in Europe

Abstract: Urban performance currently depends not only on the city’s endowment of hard infrastructure (‘physical capital’), but also, and increasingly so, on the availability and quality of knowledge communication and social infrastructure (‘human and social capital’). The latter form of capital is decisive for urban competitiveness. Against this background, the concept of the ‘smart city’ has recently been introduced as a strategic device to encompass modern urban production factors in a common framework and, in particular, to highlight the importance of Information and Communication Technologies (ICTs) in the last 20 years for enhancing the competitive profile of a city. The present paper aims to shed light on the often elusive definition of the concept of the ‘smart city’. We provide a focussed and operational definition of this construct and present consistent evidence on the geography of smart cities in the EU27. Our statistical and graphical analyses exploit in depth, for the first time to our knowledge, the most recent version of the Urban Audit data set in order to analyse the factors determining the performance of smart cities. We find that the presence of a creative class, the quality of and dedicated attention to the urban environment, the level of education, multimodal accessibility, and the use of ICTs for public administration are all positively correlated with urban wealth. This result prompts the formulation of a new strategic agenda for smart cities in Europe, in order to achieve sustainable urban development and a better urban landscape.