investment in human capital

The objective of the first chapter is to evaluate the impact of dual labor market in- stitutions on the investment in firm specific human capital and productivity. Empirically this is done by estimating the impact of mass-layoffs on subsequent wages in Spain, differentiating between workers holding permanent and fixed term contracts at the time of displacement. The main empirical finding is that permanent contract (PC) workers suffer larger and more persistent wage losses than their fixed term contract (FTC) coun- terparts. Wage losses for PC workers stem mainly from the loss of pre-displacement firm tenure, while this source is not important for FTC workers. This is taken as evidence of the difference in the accumulation of job specific human capital between the two type of contracts. The wage loss gap due to the difference of investment in firm specific human capital is estimated to be 6% after the first quarter of displacement. A search and match- ing model à la Mortensen and Pissarides allowing for endogenous accumulation of firm specific human capital and the existence of the two type of contracts is developed. The model shows that firms always offer fixed term contracts if they are allowed to do so. The employee’s decision of investment in human capital depends on the expected dura- tion of the contracts, and hence on the expiration rate of FTC and firing costs. Calibrated to the Spanish economy the model predicts that only PC workers invest in firm specific human capital, while FTC workes do not. This implies that PC workers are on average 12% more productive than FTC. The model suggests that aggregate labor productivity would increase due to the investment in firm specific human capital of FTC workers if the employment protection law for FTC workers was more stringent (i.e. lower maxi- mum duration of this type of contract).

Rustico, Productivity, Investment in Human Capital and the Challenge of Youth Employment , Cambridge Scholars Publishing –Adapt, 17-54..[r]

correlation between shocks to labor income and asset returns imply less investment in risky assets. Viceira (2001) adds that the wealth effect can also be extended to the fraction of labor income uncorrelated with the risky asset returns, and Wang (2002), that what really matters are the volatility and correlation of the unpredictable parts of labor income. Cocco, et al. (2005) find that an important determinant of the optimal portfolio is the ratio of cumulative wealth to expected labor income, which is non-stationary during the lifecycle. Empirical studies by Faig and Shum (2002) and Cocco (2005) tend to confirm these predictions, and the behavior of other nonfinancial assets affects investment decisions in a way that is similar to human capital. Some of the early studies, by assuming a fixed short-term real rate, do not consider an important element of defined contribution pension (manda- tory) systems: the volatility in the cost of the final pension. With random interest rates both the investment horizon and reinvestment risk become important. If no inflation-indexed bonds exist, we might get Siegel’s (1998) conclusion, that stocks dominate bonds in the long run. However, this is not a general conclusion.

In the model proposed, we will test whether institutions influence the growth of countries, on the understanding that they condition the benefits generated by any kind of investment –in physical capital, in human capital or in the development of new technologies- and the appropriation of these benefits. It is supposed that the adequate institutional systems permit the optimisation of the benefits of investment, facilitating the development of new initiatives, providing juridical security and stability, avoiding the unlawful appropriation of the benefits obtained, minimising the costs of protecting against irregular practices, promulgating laws that favour the smooth running of the economy and making sure that these laws are complied with. The beneficial consequences of more advanced institutions will mean, depending on the relationships proposed in the system, greater investment in physical capital, an increase in human capital and more growth.

Table 3.3 reports the results of the estimation of our core model in levels (Equation 3.1) for all our educational outcomes. This model is estimated using a linear panel fixed-effect model. We start by discussing the results of our variable of interest, that is, duration of primary education. We observe that the parameter associated to this variable turns out to be statistically significant and negative for primary the completion rate, but positive for the primary drop-out rate. This result indicates that for countries where duration of primary education is longer, the completion rate in primary education is lower, while the drop-out rate is higher. Regarding secondary education, we obtain that the link between duration of primary education and enrollment rate is statistically significant and negative, which means that those countries where duration of primary is longer, the enrollment rate in secondary education (gross and net) is lower. As we will explain later in more detail, these findings are in line with the fertility model approach mentioned in Section 3.2. With respect to the remaining covariates, they behave as expected. Those factors that have a positive link with enrollment and graduation rates, exhibit a negative link with dropouts. We observe that those countries where the GDP per capita is higher, the completion rate in primary education and the enrollment rate in secondary education is also higher; but the drop-out rate is lower. One common hypothesis is that credit constraints limit the investment of the poor in their children’s education (Schultz, 2004). Children from very low income households or with a high opportunity cost relative to household income may have lower attendance rate (Jacoby, 1994). Thus, countries with higher income levels will have higher levels of educational attainment and lower levels of drop-outs.

tion of e€ective industrial strategies. Dunning (1988), for example, argues that it might be in the foreign investors' interest as part of a global strategy to utilize their ®rm-speci®c advantages together with at least some factor inputsÐsuch as cheaper energy sourcesÐto minimize costs. Dependable energy availability is a major in- frastucture concern for foreign investors (UNCTAD, 1998). Survey studies con®rm that this is one of the main factors that in¯uence foreign investment location decisions (see, for example, Area Development, 1998; Business International Corporation, 1970). Econometric evidence relative to developing countries also shows that availability of energy is robustly correlated with FDI (Shamsuddin, 1994; Wil- helms, 1998). The variable selected in this paper to measure energy availability is net energy imports (energy use less energy production) as a percentage of energy use.

Studies showing that a good HR record attracts FDI can be classified in two groups. First, some scholars argue that HR violations indirectly deter FDI. HR respect creates favorable conditions for investment, such as “an environment unconducive to violence,” political instability or social conflict (Sorens and Ruger 2012:428); or better conditions for human capital development (Blanton and Blanton 2007). Other studies stress a more direct effect of HR violations in the host country on investors’ incentives: investing in countries that violate HR can hurt companies’ reputation. Blanton and Apodaca (2007) posit that “the global marketplace functions as an ‘audience’ that rewards or punishes the policy choices of states.” Globalization implies more exposure to this marketplace, increasing these audience costs (Blanton and Apodaca 2007:599). Colonomos and Santiso (2005:1324) stress the “development of moral expertise in civil society;” others stress the role of NGOs directing media attention to HR violations and making it difficult for MNCs to avoid being linked to countries responsible for said violations, known as the “spotlight phenomenon” (Spar 1999:70-74). 10

from those of job or industry mobility. In fact, Kambourov and Manovskii (2004c) found a very substantial increase in occupational mobility in the US over the 1968-1993 period. This has implications for a number of actively researched issues. It has been documented that, since the late 1960s, there was a considerable increase in (within-group) wage dispersion, a decline in wage stability, and a pronounced flattening of the life-cycle profiles of earnings for the cohorts of workers entering the labor market later in the period. Kambourov and Manovskii (2004a,b) argue that the increase in occupational mobility coupled with occupational specificity of human capital provides a natural explanation for those facts. Relatedly, a number of researchers, e.g., Bertola and Ichino (1995) and Ljungqvist and Sargent (1998), have described the 1970s and 1980s as a period of increased “economic turbulence.” The term “turbulence” is typically defined as an unobservable increase in the rate of skill depreciation upon a job switch during the two decades. Our results suggest that a potentially more useful definition may be an observable increase in occupational mobility over the period. Finally, anecdotal evidence and surveys of worker perceptions suggest that job stability and job security have declined in the 1980s and 1990s. It turned out to be difficult, however, to find a substantial increase in job (employer) mobility in the United States over the last three decades (see Journal of Labor Economics (1999) special issue). In light of the occupational specificity of human capital, it may be appropriate to reinterpret workers’ feeling of insecurity as a realization that they are now more likely to switch occupations.

The size hypothesis, represented by the variable total assets, cannot be rejected as explaining voluntary human capital disclosure due to its significance level of 1%. Notwithstanding, it did show a negative relationship with disclosure, contrary to the results of all of the reviewed studies that did not reject the size hypothesis. This same hypothesis, represented by the variable sales, cannot be rejected; its significance level was 1%. It did show a positive relationship with disclosure, confirming the results by Cooke (1989, 1996), Wallace et al. (1994), Meek et al. (1995), Raffournier (1995), Inchausti (1997), Bozzolan et al. (2003), Prencipe (2004) and Macagnan (2007). The results of the size hypothesis, represented by the sales variable, can be explained by agency theory because the larger a company is, the greater the number of contracts the company will have and, consequently, the greater the information asymmetry between managers and shareholders will be. This effect may generate a greater demand for disclosure in the quest to reduce agency costs.

in a number of settings (Elmira, New York; Memphis, Tennessee; and Denver, Colorado) to evaluate it. Olds’ programs focus on families that are at risk because the mother is young, poor, uneducatedand/or unmarried, and involve home visits by trained public health nurses from the prenatal period up to two years post-partum. The evaluations have shown many positive effects on maternal behavior, and on child outcomes. As of two years of age, children in Elmira were much less likely to have been seen in a hospital emergency room for unintentional injuries or ingestion of poisonous substances, although this finding was not replicated at other study sites. As of age 15, children of visited mothers were less likely to have been arrested or to have run away from home, had fewer sexual partners, and smoked and drank less. The children were also less likely to have been involved in verified incidents of child mal- treatment. This finding is important given the high incidence of maltreatment among U.S. children (and especially among poor children), and the negative outcomes of maltreated children discussed above. There was little evidence of effects on cognition at four years of age (except among children of initially heavy smokers), though one might expect the documented reduction in delin- quent behavior among the teens to be associated with improvements in even- tual schooling attainment. Olds’ model views using nurses as home visitors is key to the acceptability of the visitors (families want medical services, but may be suspicious of social workers or community workers). A randomized trial of nurses versus trained paraprofessionals (Olds, Robinson, and O’Brien, 2002) suggests that the effects that can be obtained by paraprofessionals are smaller. Also, the Olds programs are strongly targeted at families considered to be at risk and so they do not shed light on the cost-effectiveness of univer- sal home visiting programs for pregnant women and/or newborns that exist in many countries.

The nutritional status and health relationship is analyzed for adult women, not currently pregnant and with at least a child born during the last 5 years. We analyzed the relationship between maternal health indicators (problems at delivery of last child and postpartum problems at last childbirth) and long-term nutritional status (adult stature) or current nutritional status (BMI). Table 6 and Figures 13 and 14 indicate that there is not a strong association between maternal health and nutritional status. Although the differences in means for height by maternal health are positive and statistically significant, they are not large enough to infer an association. Women without problems at delivery are between 0.7 and 1.4 centimeters taller than those women with problems at delivery. In the same way, women without postpartum problems are just as tall as those women with postpartum problems. The differences in means for BMI are not statistically significant nor indicate a clear pattern. Height density functions, on the other side, are very similar for women with and without problems at delivery or postpartum problems evidencing again the weak association between maternal health and nutritional status.

However, monopoly power is not the only plausible source of inefficiency in R&D-based growth models (see, e.g., the comprehensive review by Jones, 2005). Thus, empirical evidence reported, e.g., by Griliches (1992), Jones (1995), Engelbrecht (1997), del Barrio-Castro et al. (2002), Pessoa (2005) and Porter and Stern (2000) also supports the existence of R&D spillovers in innovation —a “standing on shoulders” or a “fishing-out” effect. Several authors have also pointed out that the R&D activity may be subject to an external effect associated to the duplication and overlap of research effort —a “stepping on toes” effect (e.g., Jones, 1995; Stokey, 1995; Pessoa, 2005; Porter and Stern, 2000). Intuitively, the larger the number of people searching for ideas is, the more likely it is that duplication of research would occur. Evidence of duplicative research has also been found, e.g., by Kortum (1993) and Lambson and Phillips (2007). Both external effects —spillovers

Based on the theoretical review, our research in this paper adopts the intellectual capital structure with the components ‘human capital,’‘structural capital,’ and ‘relational capital.’Human capital refers to employees’ skills, to the experience, knowledge, know-how, values, and attitudes of individuals, and it appears as the most important intangible asset that an organization can have (Kalkan et al., 2014), turning out to be a key element when it comes to achieving organizational improvements (Schultz, 1993). In turn, structural capital has to do with the internal processes, infrastructures, information systems, culture, routines, and procedures for human capital to be productive (Ross & Ross, 1997). As for relational capital, it becomes apparent in the relationship that the company maintains with the external environment, as well as in the relationships with customers, strategic partners, providers, distributors, investors, public bodies, and other stakeholders that have some bearing on the company’s life (Todericiu & Stănit, 2015).

The Spanish section of the European Community Household Panel (ECPH) is a survey where a sample of more than 17,000 Spanish individuals were interviewed about many demographic and economic variables. From this sample, I selected the answers in 1995 to labour-related question of 3,338 not self-employed workers, non civil servant employees that provided information about their employment relationship and employer characteristics. The reasons for excluding from the sample civil servants are quite obvious, given the special characteristics of the employment in the public sector, especially in Spain, where the employer is basically not allowed to dismiss employees. I also excluded self- employed workers, since the interest of this study is to analyze the compensation of firms to their employers as different parties. Finally, it must be noticed that the number of observation vary accross the different regression performed between 2,907 and 3,338, depending on the number of observations with valid values for all variables in each case. The relevant variables used are described in Appendix B. The survey included several questions related to the training and education pursued by the worker. Among them, I chose the only one that asked the respondent employee whether “the employer provides (free or subsidised) education or training” to him/her. This question is asked among other similar references to the provision of several benefits, including health care, housing help, children care and leisure activities, which will be also analysed here. Some other questions in the survey directly asked the worker about the actual training or education pursued in the last year, and whether it was general or specific. These questions, however, fail to include any reference to who paid or provided such training (except in the case of vocational training) and will only be used later to analyse differences in returns to training and education across sectors.

Secondly, I exploit geographic variation by using local labor market informa- tion from the U.S. Census. Local labor markets differ concerning their diversity. I refer to a labor market as “diverse” when employment is not concentrated in few in- dustries but spread out over many different sectors. I exploit that in such a diverse market it will be relatively easier to find a job that matches a worker’s skill-set, even when highly specialized; mobility cost are therefore less likely to be binding. Based on these two sources of variation, I construct the following test. I use data from the Current Population Survey Displaced Worker Supplement (CPS- DWS). This data-set covers information on completed unemployment spells of workers displaced between 1983 and 2012 in the US labor market. I examine the sample of displaced workers who managed to find a job in the same occupa- tion they worked in before. I then compare the unemployment spells of more and less specialized workers in local labor markets with high and low diversity. If wait unemployment matters, workers with very specific training should have relatively longer spells in markets that exhibit few diversity and where mobility costs are likely to be binding. In diverse markets, on the other hand, the difference should be smaller or even non-existent.

The project management field is witnessing a change in the way of understanding what is expected from the labor market. Apparently the tendency is to enter a new reality in which human potential is the cause of economic growth. Training people, developing them and keeping them update with the latest technologies is the challenge facing today’s employers and the immediate future. The industrial era moves away to make way for the era of people and talent, so it’s called Human Age. Competitive advantages stop nesting in capital to focus on talent, on people, on the skills they possess. In the future, thanks to technology, borders will disappear; geographic barriers to finding a job will be able to perform any task from any place provided that the key to knowledge, capacity and ability is possessed. Human capital is a source of competitive advantage and is the key factor in the competitiveness of projects, regions and even countries.

description. Se discuten algunos criterios de medición de la inversión sectorial, la medición de los servicios del capital y la manera como influye esta composición y medición en el crecimiento de la producción de los sectores más representativos de la economía colombiana. El enfoque prioriza la diferenciación entre el acervo del capital físico y los servicios que éste presta a la producción. Las limitaciones de información primaria, ampliamente señaladas en el documento, implican que las principales afirmaciones son más hipotéticas que indicativas o descriptivas y se establecen para motivar el estudio de los temas sectoriales en coherencia con los agregados de la economía.

Just as with the first generation of concessions, today’s contracts grant companies the right to explore, produce and market resources. However, the latitude afforded to companies is relatively curtailed. Control over projects is premised on partnership, not dominance. Accordingly, leading commentators speak of the move from concession to participation (Smith et al., 2000, pp. 418–425; Note, 1973, p. 774). The actual distance between traditional and modern ones often depends on the natural attributes of the country. The most important set of nations in this regard are those that make up OPEC. Countries such as Saudi Arabia, Islamic Republic of Iran, and Iraq all renegotiated traditional concessions, replacing them with dramatically different profit-sharing regimes (Smith et al., 2000, pp. 418–422). Nonetheless, the locus of control has invariably shifted along the continuum towards partnership. Unlike the production-sharing agreement, the terms of participation are mainly based on a grant for a specified period of time. 6

All in all, these estimates confirm the positive (direct and indirect) effect of education on wages and the existence of substantial regional variability in the return to investments in this type of human capital. In addition, the results in Table 5 show that there was also regional heterogeneity in the return to the other types of human capital considered in this study: general experience in the labour market and specific experience in the firm (tenure). In the country as a whole, an additional year of general experience caused an increase of around 1% in the expected wage. The return to experience is much higher in regions such as Extremadura and Galicia (1.76% and 1.63% respectively) and substantially below the country average in others like Baleares (0.68%) and Cantabria (0.78%). The case of returns to tenure is quite similar, as the profile of wage increases associated with the defined intervals of years of specific experience varies widely across regions. For instance, in the case of Madrid there was a substantial gain linked to workers’ tenure: employees with more than 15 years’ experience in the firm earned as much as 41% more than those with one or less than one year. This gain was far lower in Extremadura and Galicia (14% and 15% respectively.

La durabilidad de los negocios debe ser cíclica, no se espera tener negocios que se acaben en algún momento por su proceso en específico, todo lo contrario. Los proyectos que se escogen deben poder mantenerse en el tiempo; una siembra de árboles debe tener diferentes etapas para asegurar un flujo de caja y renovación del negocio constantes. Esto atrae a clientes por tener rentas constantes y le provee al fondo activos fijos que le rinden lo suficiente para su subsistencia y rentabilidad. Los retornos en proyectos agroindustriales pueden darse desde los primeros 6 meses hasta los 10 años, dependiendo del negocio que se escoja, variando los riesgos y dándoles diferentes opciones a los inversionistas para que puedan escoger según su disponibilidad, capital y aversión al riesgo.