Showing papers on "Human capital published in 2010"

The effect of board capital and CEO power on strategic change

Abstract: We develop the construct of board capital, composed of the breadth and depth of directors' human and social capital, and explore how board capital affects strategic change. Building upon resource dependence theory, we submit that board capital breadth leads to more strategic change, while board capital depth leads to less. We also recognize CEO power as a moderator of these relationships. Our hypotheses are tested using a random sample of firms on the S&P 500. We find support for the effect of board capital on strategic change, and partial support for the moderating effect of CEO power. Copyright © 2010 John Wiley & Sons, Ltd.

The Relationship Between Working Capital Management And Profitability: Evidence From The United States

Abstract: The paper seeks to extend Lazaridis and Tryfonidis’s findings regarding the relationship between working capital management and profitability. A sample of 88 American firms listed on New York Stock Exchange for a period of 3 years from 2005 to 2007 was selected. We found statistically significant relationship between the cash conversion cycle and profitability, measured through gross operating profit. It follows that managers can create profits for their companies by handling correctly the cash conversion cycle and by keeping accounts receivables at an optimal level. The study contributes to the literature on the relationship between the working capital management and the firm’s profitability.

How General Is Human Capital? A Task-Based Approach

Abstract: This article studies how portable skills accumulated in the labor market are. Using rich data on tasks performed in occupations, we propose the concept of task‐specific human capital to measure empirically the transferability of skills across occupations. Our results on occupational mobility and wages show that labor market skills are more portable than previously considered. We find that individuals move to occupations with similar task requirements and that the distance of moves declines with experience. We also show that task‐specific human capital is an important source of individual wage growth, accounting for up to 52% of overall wage growth.

The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital

Abstract: In 1961, Nicholas Kaldor used his list of six “stylized” facts both to summarize the patterns that economists had discovered in national income accounts and to shape the growth models that they were developing to explain them. Redoing this exercise today, nearly fifty years later, shows how much progress we have made. In contrast to Kaldor’s facts, which revolved around a single state variable, physical capital, our six updated facts force consideration of four far more interesting variables: ideas, institutions, population, and human capital. Dynamic models have uncovered subtle interactions between these variables and generated important insights about such big questions as: Why has growth accelerated? Why are there gains from trade?

Intellectual capital and business performance in the pharmaceutical sector of Jordan

Abstract: Purpose – The purpose of this study is to empirically test the relationship between intellectual capital (i.e. human capital, structural capital, relational capital) and business performance within the pharmaceutical sector of Jordan.Design/methodology/approach – A valid research instrument was utilized to conduct a survey of 132 top‐ and middle‐level managers from all 15 members of the Jordanian Association of Pharmaceutical Manufacturers.Findings – A correlation and path analysis were conducted to ascertain the validity of the measures and models. Statistical support was found for the hypothesized relationships.Research limitations/implications – The findings offer valuable insights on the generalizability of intellectual capital in a novel research setting.Practical implications – Intellectual capital measurement is of primary interest for senior executives of pharmaceutical firms in Jordan.Originality/value – The research reported is among only a few to investigate the issue of intellectual capital in...

The Consequences of Child Soldiering

Abstract: Little is known about the impacts of military service on human capital and labor market outcomes due to an absence of data as well as sample selection: recruits are self-selected, screened, and selectively survive. We examine the case of Uganda, where rebel recruitment methods provide exogenous variation in conscription. Economic and educational impacts are widespread and persistent: schooling falls by nearly a year, skilled employment halves, and earnings drop by a third. Military service seems to be a poor substitute for schooling. Psychological distress is evident among those exposed to severe war violence and is not limited to ex-combatants.

How much does immigration boost innovation

Abstract: We measure the extent to which skilled immigrants increase inno vation in the United States. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, due to their disproportionately holding science and engineering degrees. Using a 1940-2000 state panel, we show that a 1 percent age point increase in immigrant college graduates' population share increases patents per capita by 9-18 percent. Our instrument for the change in the skilled immigrant share is based on the 1940 distribu tion across states of immigrants from various source regions and the subsequent national increase in skilled immigration from these regions. (JEL J24, J61, 031, 033)

Valuing ecosystem services: Theory, practice, and the need for a transdisciplinary synthesis

Abstract: The concept of ecosystem services has shifted our paradigm of how nature matters to human societies. Instead of viewing the preservation of nature as something for which we have to sacrifice our well-being, we now perceive the environment as natural capital, one of society's important assets. But ecosystem services are becoming increasingly scarce. In order to stop this trend, the challenge is to provoke society to acknowledge the value of natural capital. Ecosystem services valuation (ESV) is the method to tackle such a challenge. ESV is the process of assessing the contributions of ecosystem services to sustainable scale, fair distribution, and efficient allocation. It is a tool that (1) provides for comparisons of natural capital to physical and human capital in regard to their contributions to human welfare; (2) monitors the quantity and quality of natural capital over time with respect to its contribution to human welfare; and (3) provides for evaluation of projects that will affect natural capital stocks. This review covers: (1) what has been done in ESV research in the last 50 years; (2) how it has been used in ecosystem management; and (3) prospects for the future. Our survey of the literature has shown that over time, there has been movement toward a more transdisciplinary approach to ESV research which is more consistent with the nature of the problems being addressed. On the other hand, the contribution of ESV to ecosystem management has not been as significant as hoped nor as clearly defined. Conclusions drawn from the review are as follows: first, ESV researchers will have to transcend disciplinary boundaries and synthesize tools, skills, and methodologies from various disciplines; second, ESV research has to become more problem-driven rather than tool-driven because ultimately the success of ESV will be judged on how well it facilitates real-world decision making and the conservation of natural capital.

The changing wealth of nations : measuring sustainable development in the new millennium

Abstract: This book is about development and measuring development progress. While precise definitions may vary, development is, at heart, a process of building wealth, the produced, natural, human, and institutional capital which is the source of income and wellbeing. A key finding is that it is intangible wealth, human and institutional capital, which dominates the wealth of all countries, rising as a share of the total as countries climb the development ladder. The book is divided into two parts. The first part provides the big picture of changes in wealth by income group and geographic region, with a focus on natural capital because it is especially important for low-income developing countries. The second part presents case studies that illustrate particular aspects of wealth accounting, including accounting for climate change, the role of intangible capital in growth and development, measuring human capital, and the use of wealth accounting to improve transparency and governance in resource-rich economies. The final chapter reports on the implementation of wealth accounting by countries. The appendixes provide the full wealth accounts for individual countries and for aggregations by income group and geographic region.

Self-Selection Patterns in Mexico-U.S. Migration: The Role of Migration Networks

Abstract: The authors examine the role of migration networks in determining self-selection patterns of Mexico-U.S. migration. They first present a simple theoretical framework showing how such networks impact on migration incentives at different education levels and, consequently, how they are likely to affect the expected skill composition of migration. Using survey data from Mexico, the authors then show that the probability of migration is increasing with education in communities with low migrant networks, but decreasing with education in communities with high migrant networks. This is consistent with positive self-selection of migrants being driven by high migration costs, and with negative self-selection of migrants being driven by lower returns to education in the U.S. than in Mexico.

The missing link: knowledge diffusion and entrepreneurship in endogenous growth

Abstract: The intellectual breakthrough contributed by the new growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. However, endogenous growth theory does not explain how or why spillovers occur. This paper presents a model that shows how growth depends on knowledge accumulation and its diffusion through both incumbents and entrepreneurial activities. We claim that entrepreneurs are one missing link in converting knowledge into economically relevant knowledge. Implementing different regression techniques for the Organisation for Economic Co-operation and Development (OECD) countries during 1981 to 2002 provides surprisingly robust evidence that primarily entrepreneurs contributed to growth and that the importance of entrepreneurs increased in the 1990s. A Granger test confirms that causality goes in the direction from entrepreneurs to growth. The results indicate that policies facilitating entrepreneurship are an important tool to enhance knowledge diffusion and promote economic growth.

The Political Economy of Active Labor-Market Policy:

Abstract: Active labor-market policies (ALMPs) have developed significantly over the past two decades across Organization for Economic Cooperation and Development (OECD) countries, with substantial cross-national differences in terms of both extent and overall orientation. The objective of this article is to account for cross-national variation in this policy field. It starts by reviewing existing scholarship concerning political, institutional, and ideational determinants of ALMPs. It then argues that ALMP is too broad a category to be used without further specification, and it develops a typology of four different types of ALMPs: incentive reinforcement, employment assistance, occupation, and human capital investment. These are discussed and examined through ALMP expenditure profiles in selected countries. The article uses this typology to analyze ALMP trajectories in six Western European countries and shows that the role of this instrument changes dramatically over time. It concludes that there is little regular...

Girl power: the European marriage pattern and labour markets in the North Sea region in the late medieval and early modern period1

Abstract: This article argues that the European Marriage Pattern (EMP) has played a fundamental role in western Europe’s economic development. The EMP emerged in north-western Europe in the late medieval period as a result of the preaching of the Catholic Church promoting marriage based on consensus, the rise of labour markets, and specific institutions concerning property transfers between generations that encouraged wage labour by women. It resulted in a demographic regime embedded in a highly commercial environment, in which households interacted frequently with labour, capital, and commodity markets.We also discuss possible long-term consequences for human capital formation and institution building.

The Economics of International Differences in Educational Achievement

Abstract: An emerging economic literature over the past decade has made use of international tests of educational achievement to analyze the determinants and impacts of cognitive skills. The cross-country comparative approach provides a number of unique advantages over national studies: It can exploit institutional variation that does not exist within countries; draw on much larger variation than usually available within any country; reveal whether any result is country-specific or more general; test whether effects are systematically heterogeneous in different settings; circumvent selection issues that plague within-country identification by using system-level aggregated measures; and uncover general-equilibrium effects that often elude studies in a single country. The advantages come at the price of concerns about the limited number of country observations, the cross-sectional character of most available achievement data, and possible bias from unobserved country factors like culture. This chapter reviews the economic literature on international differences in educational achievement, restricting itself to comparative analyses that are not possible within single countries and placing particular emphasis on studies trying to address key issues of empirical identification. While quantitative input measures show little impact, several measures of institutional structures and of the quality of the teaching force can account for significant portions of the large international differences in the level and equity of student achievement. Variations in skills measured by the international tests are in turn strongly related to individual labor-market outcomes and, perhaps more importantly, to cross-country variations in economic growth.

Government Expenditure And Economic Growth In Nigeria, 1970-2008: A Disaggregated Analysis

Abstract: The paper observes that rising government expenditure has not translated to meaningful development as Nigeria still ranks among world’s poorest countries. In an attempt to investigate the effect of government expenditure on economic growth, we employed a disaggregated analysis. The results reveal that government total capital expenditure (TCAP), total recurrent expenditures (TREC), and government expenditure on education (EDU) have negative effect on economic growth. On the contrary, rising government expenditure on transport and communication (TRACO), and health (HEA) results to an increase in economic growth. The authors’ recommendations include among others the following. Government should increase both capital expenditure and recurrent expenditure, including expenditures on education, as well as ensuring that funds meant for the development of these sectors are properly managed. Secondly, government should increase its investment in the development of transport and communication, in order to create an enabling environment for business to strive. Thirdly, government should raise its expenditure in the development of the health sector since it would enhance labour productivity and economic growth. Lastly, government should encourage and increase the funding of anti-corruption agencies in order to tackle the high level of corruption found in public office.

Civic Capital as the Missing Link

Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation - which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.

Stakeholder welfare and firm value

Abstract: Using data from the independent social choice investment advisory firm Kinder, Lydenberg, Domini (KLD), we construct a stakeholder welfare score measuring the extent to which firms meet the expectation of their non-shareholder stakeholders (such as employees, customers, communities, and environment), and find it to be associated with positive valuation effects: an increase of 1 in the stakeholder welfare score leads to an increase of 0.587 in Tobin’s Q . Furthermore, the valuation effects vary across stakeholders and the aforementioned positive effects are driven by firms’ performance on employee relations and environmental issues. These results suggest that stakeholder welfare (in particular, employee welfare and environmental performance) represents intangibles (such as reputation or human capital) crucial for shareholder value creation rather than private benefits managers pursue for their own social or economic needs.

Economic Literacy: An International Comparison

Abstract: This article uses international panel data on 55 countries from 1995 to 2008, merging indicators of economic literacy with a large set of macroeconomic and institutional variables Results show that there is substantial heterogeneity of financial and economic competence across countries, and that human capital indicators (PISA test scores and college attendance) are positively correlated with economic literacy Furthermore, inhabitants of countries with more generous social security systems are generally less literate, lending support to the hypothesis that the incentives to acquire economic literacy are related to the amount of resources available for private accumulation

Health, Human Capital, and Development.

Abstract: How much does disease depress development in human capital and income around the world? I discuss a range of micro evidence, which finds that health is both human capital itself and an input to producing other forms of human capital. I use a standard model to integrate these results and suggest a reinterpretation of much of the micro literature. I then discuss the aggregate implications of micro estimates but note the complications in extrapolating to general equilibrium, especially because of health's effect on population size. I also review the macro evidence on this topic, which consists of either cross-country comparisons or measuring responses to health shocks. Micro estimates are one to two orders of magnitude smaller than the cross-country relationship but nevertheless imply high benefit-to-cost ratios from improving certain forms of health.

Youth unemployment: Entrepreneurship development programme as an intervention mechanism

Abstract: Within the framework of potential efforts and strategies to boost employment and job creation for young people, entrepreneurship is increasingly accepted as an important means and a valuable additional strategy to create jobs and improve livelihoods and economic independence of young people. Regrettably, problems of unemployment as experienced by the educated youths and even the uneducated but skilled youths have become more pathetic in many developing economies, despite the neo-liberal strategies in addressing the issue of enhancing human capital. The aim of this paper is therefore to examine the constraints that impede young people in search of non-existing jobs and the urgent need to orient people of these affected economies particularly Nigerians on imbibing self-employment and entrepreneurship through vocational and entrepreneurial training programmes as a short-term intervention mechanism. Key words: Entrepreneurship, unemployment, youth.

The High Cost of Low Educational Performance: The Long-Run Economic Impact of Improving PISA Outcomes.

Abstract: This report uses recent economic modelling to relate cognitive skills – as measured by PISA and other international instruments – to economic growth, demonstrating that relatively small improvements to labour force skills can largely impact the future well-being of a nation. The report also shows that it is the quality of learning outcomes, not the length of schooling, which makes the difference. A modest goal of all OECD countries boosting their average PISA scores by 25 points over the next 20 years would increase OECD gross domestic product by USD 115 trillion over the lifetime of the generation born in 2010. Other aggressive goals could result in gains in the order of USD 260 trillion.

Review article: Enhancing employability: Human, cultural, and social capital in an era of turbulent unpredictability

Abstract: Turbulence and unpredictability in 21st-century labor markets arguably magnify the importance of maintaining employability. Drawing on recent research, I discuss three mechanisms for enhancing employability in this context: identity work, training and networking, and laboring in unpaid and marginal paid positions. Few of these activities are counted as ‘work’ because they are mostly unpaid and they often take place outside formal job structures. By specifying how a range of employment-related activities are essential to and even constitute work, this article contributes to debates about the scope and boundaries of employment and shows how everyday actions build and reinforce new economic structures — how individual actions make the new economy possible. It also provides greater specification of the concept of employability.