Showing papers on "Human capital published in 2014"
TL;DR: In this paper, the authors present an assessment of a rapidly growing body of economic research on financial literacy and examine the impact of financial literacy on economic decision-making in the United States and elsewhere.
Abstract: This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research, which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare, as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy. (JEL A20, D14, G11, I20, J26)
1,741 citations
TL;DR: This review analyses recent evidence of the impacts of SI in both developing and industrialized countries, and demonstrates that both yield and natural capital dividends can occur.
583 citations
TL;DR: In this article, the authors take a holistic approach and review human capital theory from four comprehensive perspectives focusing on the methodological, empirical, practical, and moral aspects of the theory, and present a systematic approach to bridge this gap and organize them in a systematic way.
Abstract: Human capital theory has had a profound impact on a range of disciplines from economics to education and sociology. The theory has always been the subject of bitter criticisms from the very beginning, but it has comfortably survived and expanded its influence over other research disciplines. Not surprisingly, a considerable number of criticisms have been made as a reaction to this expansion. However, it seems that these criticisms are rather fragmented and disorganized. To bridge this gap and organize them in a systematic way, the present article takes a holistic approach and reviews human capital theory from four comprehensive perspectives focusing on the methodological, empirical, practical, and moral aspects of the theory.
454 citations
TL;DR: This paper found that even after considering sector differences in hours worked and human capital per worker, as well as alternative measures of sector output constructed from household survey data, a puzzlingly large gap remains.
Abstract: According to national accounts data, value added per worker is much higher in the nonagricultural sector than in agriculture in the typical country, particularly in developing countries. Taken at face value, this “agricultural productivity gap” suggests that labor is greatly misallocated across sectors. In this article, we draw on new micro evidence to ask to what extent the gap is still present when better measures of sector labor inputs and value added are taken into consideration. We find that even after considering sector differences in hours worked and human capital per worker, as well as alternative measures of sector output constructed from household survey data, a puzzlingly large gap remains.
450 citations
TL;DR: In this paper, the authors leverage insights from economics, strategy, human resources, and psychology to develop an integrated and holistic framework that defines the structure, function, levels, and combinations of human capital resources.
360 citations
TL;DR: In this article, the authors explored the human capital accumulation theory and found evidence for human capital as a channel through which inequality may affect economic performance, and showed that increased income disparities depress skills development among individuals with poorer parental education background.
Abstract: In most OECD countries, the gap between rich and poor is at its highest level since 30 years. Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since. However, the rise in overall income inequality is not (only) about surging top income shares: often, incomes at the bottom grew much slower during the prosperous years and fell during downturns, putting relative (and in some countries, absolute) income poverty on the radar of policy concerns. This paper explores whether such developments may have an impact on economic performance.
Drawing on harmonised data covering the OECD countries over the past 30 years, the econometric analysis suggests that income inequality has a negative and statistically significant impact on subsequent growth. In particular, what matters most is the gap between low income households and the rest of the population. In contrast, no evidence is found that those with high incomes pulling away from the rest of the population harms growth. The paper also evaluates the “human capital accumulation theory” finding evidence for human capital as a channel through which inequality may affect growth. Analysis based on micro data from the Adult Skills Survey (PIAAC) shows that increased income disparities depress skills development among individuals with poorer parental education background, both in terms of the quantity of education attained (e.g. years of schooling), and in terms of its quality (i.e. skill proficiency). Educational outcomes of individuals from richer backgrounds, however, are not affected by inequality.
It follows that policies to reduce income inequalities should not only be pursued to improve social outcomes but also to sustain long-term growth. Redistribution policies via taxes and transfers are a key tool to ensure the benefits of growth are more broadly distributed and the results suggest they need not be expected to undermine growth. But it is also important to promote equality of opportunity in access to and quality of education. This implies a focus on families with children and youths – as this is when decisions about human capital accumulation are made -- promoting employment for disadvantaged groups through active labour market policies, childcare supports and in-work benefits.
327 citations
TL;DR: It is found that effective human capital per worker varies substantially across countries, and the model implies that output per worker is highly responsive to changes in TFP and demographic variables.
Abstract: We reevaluate the role of human capital in determining the wealth of nations. We use standard human capital theory to estimate stocks of human capital and allow the quality of human capital to vary across countries. Our model can explain differences in schooling and earnings profiles and, consequently, estimates of Mincerian rates of return across countries. We find that effective human capital per worker varies substantially across countries. Cross-country differences in Total Factor Productivity (TFP) are significantly smaller than found in previous studies. Our model implies that output per worker is highly responsive to changes in TFP and demographic variables. (JEL E23, I25, J24, J31, O47) No question has perhaps attracted as much attention in the economics literature as “Why are some countries richer than others?” Much of the current work traces back to the classic work of Solow (1956). Solow’s seminal paper suggested that differ ences in the rates at which capital is accumulated could account for differences in output per capita. More recently, following the work of Lucas (1988), human capital disparities were given a central role in the analysis of growth and development. However, the best recent work on the topic reaches the opposite conclusion. Klenow and Rodriguez-Clare (1997); Hall and Jones (1999); Parente and Prescott (2000); and Bils and Klenow (2000) argue that most of the cross-country differences in output per worker are not driven by differences in human capital (or physical capital); rather they are due to differences in a residual, total factor productivity (TFP). In this paper we revisit the development problem. In line with the earlier view, we find that factor accumulation is more important than TFP in accounting for relative incomes across countries. The key difference between our work and previous analyses is in the measurement of human capital. The standard approach largely inspired by the work of Mincer (1974), takes estimates of the rate of return to schooling as building blocks to directly measure a country’s stock of human capital. Implicitly, this method assumes that the marginal contribution to output of one additional year
306 citations
TL;DR: In this paper, the authors identify self-employment opportunities, often exploited in abject poverty, that do not lead to sustainable growth solutions, and find that discovery and creation opportunities while difficult to exploit in poverty contexts hold the greatest potential for significant economic impact.
Abstract: Entrepreneurial activity does not always lead to economic growth. While improvements have been made to human capital, property rights protection, and access to financial capital in abject poverty contexts with the assumption that they will increase entrepreneurial activity, the results have been mixed. More recently, many entrepreneurs interested in poverty alleviation are crossing borders to engage in initiatives aimed at reducing poverty internationally. These efforts have also had mixed results. This paper posits that one reason is that entrepreneurial opportunities and their wealth creation potential vary, and the impact of exploiting these opportunities on economic growth in poverty contexts can also vary. This paper identifies self-employment opportunities, often exploited in abject poverty, that do not lead to sustainable growth solutions. Alternatively, discovery and creation opportunities while difficult to exploit in poverty contexts hold the greatest potential for significant economic impact.
242 citations
TL;DR: In this article, the authors investigated the relationship between time preferences and lifetime social and economic outcomes using a Swedish longitudinal data set that links information from a large survey on children's time preferences at age 13 to administrative registers spanning over five decades.
Abstract: This study investigates the relationship between time preferences and lifetime social and economic outcomes. We use a Swedish longitudinal data set that links information from a large survey on children's time preferences at age 13 to administrative registers spanning over five decades. Our results indicate a substantial adverse relationship between high discount rates and school performance, health, labour supply and lifetime income. Males and high-ability children gain significantly more from being future oriented. These discrepancies are largest regarding outcomes later in life. We also show that the relationship between time preferences and long-run outcomes operates through early human capital investments.
231 citations
TL;DR: The theory and findings presented in this article have implications for the way staffing and training may be used strategically to weather economic uncertainty (recession effects) and have important practical implications by demonstrating that firms that more effectively staff and train will outperform competitors throughout all pre- and postrecessionary periods.
Abstract: This study integrates research from strategy, economics, and applied psychology to examine how organizations may leverage their human resources to enhance firm performance and competitive advantage. Staffing and training are key human resource management practices used to achieve firm performance through acquiring and developing human capital resources. However, little research has examined whether and why staffing and training influence firm-level financial performance (profit) growth under different environmental (economic) conditions. Using 359 firms with over 12 years of longitudinal firm-level profit data, we suggest that selective staffing and internal training directly and interactively influence firm profit growth through their effects on firm labor productivity, implying that staffing and training contribute to the generation of slack resources that help buffer and then recover from the effects of the Great Recession. Further, internal training that creates specific human capital resources is more beneficial for prerecession profitability, but staffing is more beneficial for postrecession recovery, apparently because staffing creates generic human capital resources that enable firm flexibility and adaptation. Thus, the theory and findings presented in this article have implications for the way staffing and training may be used strategically to weather economic uncertainty (recession effects). They also have important practical implications by demonstrating that firms that more effectively staff and train will outperform competitors throughout all pre- and postrecessionary periods, even after controlling for prior profitability.
227 citations
Posted Content•
TL;DR: This paper showed that subscriber density is a strong predictor of city growth after the onset of French industrialization and that initial literacy levels, on the other hand, are associated with development in the cross-section, but they do not predict growth.
Abstract: While human capital is a strong predictor of economic development today, its importance for the Industrial Revolution has typically been assessed as minor. To resolve this puzzling contrast, we differentiate average human capital (literacy) from upper-tail knowledge. As a proxy for the historical presence of knowledge elites, we use city-level subscriptions to the famous Encyclopedie in mid-18th century France. We show that subscriber density is a strong predictor of city growth after the onset of French industrialization. Alternative measures of development such as soldier height, disposable income, and industrial activity confirm this pattern. Initial literacy levels, on the other hand, are associated with development in the cross-section, but they do not predict growth. Finally, by joining data on British patents with a large French firm survey from the 1840s, we shed light on the mechanism: upper-tail knowledge raised productivity in innovative industrial technology.
TL;DR: In this article, the integration of global mobility and global talent management can contribute to the success of the multinational enterprise's (MNEs) global workforce management systems, but the two areas of practice have largely been decoupled in research and practice.
TL;DR: The special issue on strategic human capital as mentioned in this paper sought to bridge this divide through creating a platform for researchers from both fields to engage in dialogue, and explored the manifestations of this divide and identified six issues that emerged that could provide areas of common interest across the two fields.
TL;DR: Zhang et al. as mentioned in this paper carried out a normative research to explain the coexistence of the phenomena of the resource curse and the resource blessing based on an organic combination of conceptual and mathematical models and established a conceptual model to analyse the potential effects of the government's policy preference and natural resource development activities on human capital accumulation and economic growth.
TL;DR: The authors explored the linkage between entrepreneurship-specific education participation, alertness and risk-taking general human capital skills, and the intensity of entrepreneurial intention, and challenged the view that ESE generates equal benefits for both female and male students.
Abstract: This study explores the linkage between entrepreneurship-specific education participation, alertness and risk-taking general human capital skills, and the intensity of entrepreneurial intention. We integrate insights from human capital theory with views from social feminist theory and socially learned stereotypes theory, and challenge the view that ESE generates equal benefits for both female and male students.
TL;DR: The role of educational attainment in global population trends and models has been systematically and quantitatively analyzed in this article. But the authors focus on the role of education in global sustainable development, emphasizing alternative trends in human capital, new ways of studying ageing and the quantification of alternative population, and education pathways in the context of sustainable development.
Abstract: This book addresses systematically and quantitatively the role of educational attainment in global population trends and models. Seven background chapters summarize past trends in fertility, mortality, migration, and education; examine relevant theories and identify key determining factors; and set the assumptions that are subsequently translated into alternative scenario projections to 2100. These assumptions derive from a global survey of hundreds of experts and five expert meetings on as many continents. Another chapter details their translation into multi-dimensional projections by age, sex, and level of education. The book's final chapters analyse the results, emphasizing alternative trends in human capital, new ways of studying ageing and the quantification of alternative population, and education pathways in the context of global sustainable development. An appendix and associated web link present detailed results for all countries. The book shows that adding education to age and sex substantially alters the way we see the future.
TL;DR: The authors presented a global overview of human capital mobility through bilateral migration stocks by gender and education in 1990 and 2000, and calculation of nuanced brain drain indicators, using a novel estimation procedure based on a pseudo-gravity model, then identified key determinants of international migration, and subsequently uses estimated parameters to impute missing data.
[...]
TL;DR: In this article, the authors used a newly assembled sample of 1,528 regions from 83 countries to compare the speed of per capita income convergence within and across countries, and found that regional growth is shaped by similar factors as national growth, such as geography and human capital.
Abstract: We use a newly assembled sample of 1,528 regions from 83 countries to compare the speed of per capita income convergence within and across countries. Regional growth is shaped by similar factors as national growth, such as geography and human capital. Regional convergence rate is about 2 % per year, comparable to that between countries. Regional convergence is faster in richer countries, and countries with better capital markets. A calibration of a neoclassical growth model suggests that significant barriers to factor mobility within countries are needed to account for the evidence.
TL;DR: In this paper, the authors evaluated the human capital and social capital of managers and the influence of these attributes on the performance of small and medium-sized Portuguese companies, and found that human capital affects social capital, and that experience and cognitive ability influence personal relations and complicity.
Abstract: Purpose – The aim of this paper is to evaluate the human capital and social capital of managers and the influence of these attributes on the performance of small and medium-sized Portuguese companies. Design/methodology/approach – The structural modeling approach was applied to a sample of 199 small and medium-sized companies aged between 3 and 15 years, from five different sectors of activity. Findings – It was found that human capital affects social capital, and that experience and cognitive ability influence personal relations and complicity. Organizational performance is strongly influenced by human capital through the cognitive ability of the manager. Practical implications – Based on these findings managers can gain a better knowledge about how to improve the performance of their firms, for example through adjustments in communication methods or strategic decision capacities. Originality/value – This work is innovative in the sense that it confirms the influence of human capital on social capital, a...
TL;DR: This paper found that about a quarter of cross-country and within-country TFP gaps can be explained by management practices, including competition, governance, human capital, and informational frictions.
Abstract: Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the large and persistent total factor productivity (TFP) differences across firms and countries. This review paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of crosscountry and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively. Competition, governance, human capital, and informational frictions help account for the variation in management. We make some suggestions for both policy and future research. (JEL: L2, M2, O14, O32, O33)
TL;DR: In this article, the authors reviewed an amount of researches examining the relationships between FDI and economic growth, especially the effects of FDI on economic growth from 1994 up to 2012, and found that the main finding of the FDI-EG relation is significantly positive, but in some cases it is negative or even null.
TL;DR: In this article, the authors examined whether founders' backgrounds influence new firm survival in the early years after startup, focusing on the impact of unemployment-driven entrepreneurship, and found that pre-entry capabilities play an important role in the success of opportunity-based entrepreneurs, but have little influence on the early success of necessity-based ones.
Abstract: This paper examines whether founders’ backgrounds influence new firm survival in the early years after startup, focusing, in particular, on the impact of unemployment-driven entrepreneurship. For entrepreneurs who left their previous employment to found a new firm, both general and specific human capital play a key role in enhancing early survival chances. However, various forms of human capital have little effect on early survival of unemployment-driven entrepreneurs, who rely mostly on previous entrepreneurial experience to persevere. Results suggest that pre-entry capabilities play an important role in the early success of opportunity-based entrepreneurs, but have little influence on the early success of necessity-based ones.
TL;DR: In this paper, the relationship between intellectual capital (IC) and performance of pharmaceutical firms in India was studied and three extended and modified models of Value Added Intellectual Coefficient (VAIC) method were proposed.
Abstract: Purpose – The purpose of this paper is to study the relationship between intellectual capital (IC) and performance of pharmaceutical firms in India. The secondary objective is to propose and test modified models of Value Added Intellectual Coefficient (VAIC™) method. Design/methodology/approach – Data on 22 large pharmaceutical firms collected for empirical investigation. Return on assets and return on sales are performance variables. IC and its components – human capital, structural capital and relational capital (RC), are predictor variables. Three extended and modified VAIC™ models (e-VAIC™) are proposed. Multiple regression technique is applied on pooled data to draw inferences. Findings – Results show instances of positive relationship between IC and performance variables. RC, the new variable, does not demonstrate statistically significant relationship with performance variables. Research limitations/implications – Due to inadequate reporting of IC and its components, availability of data on various...
TL;DR: In this article, the authors scrutinized the recently postulated link between the European Marriage Pattern (EMP) and economic success and found that there is no evidence that the EMP improved economic performance by empowering women, increasing human capital, adjusting population to economic trends, or sustaining beneficial cultural norms.
Abstract: This article scrutinizes the recently postulated link between the European
Marriage Pattern (EMP) and economic success. Multivariate analysis of 4,705
demographic observations, covering women’s marriage age, female lifetime
celibacy, and household complexity in 39 European countries, shows that the
most extreme manifestations of the EMP were associated with economic
stagnation rather than growth. There is no evidence that the EMP improved
economic performance by empowering women, increasing human capital
investment, adjusting population to economic trends, or sustaining beneficial
cultural norms. European economic success was not caused by the EMP and its
sources must therefore be sought in other factors.
14 Mar 2014
TL;DR: This article developed and estimated an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks, decomposed into contributions of human capital and job search, within and between jobs.
Abstract: We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Wage growth is decomposed into contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers. The contribution from job search to wage growth, both within- and between-job, declines over the first ten years of a career - the `job-shopping' phase of a working life - after which workers settle into high-quality jobs using outside o ffers to generate gradual wage increases, thus reaping the benefi ts from competition between employers.
TL;DR: The authors argue that the extent to which the firm is able to benefit from this human capital can be severely limited by the demands for information processing that directors face from their other board positions.
TL;DR: This paper found that about a quarter of cross-country and within-country TFP gaps can be explained by management practices, including competition, governance, human capital, and informational frictions.
Abstract: Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the largeandpersistenttotalfactorproductivity(TFP)differencesacrossfirmsandcountries.Thisreview paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of cross-country and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively for performance at the level of the firm and the nation. Competition, governance, human capital, and informational frictions help account for the variation in management. We make some suggestions for both policy and future research. (JEL: L2, M2, O14, O32, O33)
TL;DR: Using a global panel of countries, it is found that after the effect of human capital dynamics is controlled for, no evidence exists that changes in age structure affect labor productivity and that improvements in educational attainment are the key to explaining productivity and income growth.
Abstract: The effect of changes in age structure on economic growth has been widely studied in the demography and population economics literature. The beneficial effect of changes in age structure after a decrease in fertility has become known as the "demographic dividend." In this article, we reassess the empirical evidence on the associations among economic growth, changes in age structure, labor force participation, and educational attainment. Using a global panel of countries, we find that after the effect of human capital dynamics is controlled for, no evidence exists that changes in age structure affect labor productivity. Our results imply that improvements in educational attainment are the key to explaining productivity and income growth and that a substantial portion of the demographic dividend is an education dividend.
TL;DR: In this article, the authors revisited the relationship among institutions, human capital, and development, and showed that the impact of institutions on long-run development is robust, whereas the estimates of the effect of human capital are much diminished and become consistent with micro estimates.
Abstract: In this article, we revisit the relationship among institutions, human capital, and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified, both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about four to five times greater than that implied by micro (Mincerian) estimates, found in the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, whereas the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the ...
TL;DR: Li et al. as mentioned in this paper found that between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality, which was attributed to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium.
Abstract: Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality. Decomposition analysis reveals 80% of this wage growth to be attributable to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium. By employing an aggregate production function framework, we account for the sources of wage growth and wage inequality amid fast economic growth and transition. We find capital accumulation, skill-biased technological change, and rural–urban migration to be the major forces behind the evolving wage structure in urban China.