Human Capital Contracts Research Articles

The assetization of baseball players: Instrumentalizing promise with signing bonuses and human capital contracts

The idea that humans can be assets because their skills and work are resources that create value has been at the core of a long-standing concern among accounting scholars. This paper explores how minor league baseball players experience being considered assets and how they decide to partake in their assetization. Drawing on a range of data sources–59 interviews, archival material, and work experience–this study offers a voice to the assetized subject, and highlights that being an asset is a desired status. Assetization is a value-enhancing experience that depends on the adherence to a promise. Our results also show that financial instruments such as human capital contracts can be promissory mechanisms allowing assetized subjects to enhance their human capital value and assume the dual role of investee-investor, which further conditions an enactment of the entrepreneur of the self.

Финансирование образования: тренд на персонализацию

This article analyzes the ratio of funding higher education in Russia and foreign countries. It is shown, that at a similar cost structure in Russia compared to other countries, and their monetary value is three times behind the level of the OECD countries. On the basis of generalization of foreign experience of reforms in the management of the financing of higher education research identified the major trends in the financing of Russian higher education: university leaders support concentration, reliance on public higher education financing as the main source, poor use of publicprivate partnership arrangements and income from funds of the trust capital. The focus of the article is on the transition to investment financing models of education transfer management of resources based on principles of personalization, including such tools as performance based contracts, competitive funds and vouchers, based on merit, human capital contracts, as well as individual educational accounts (lifelong learning accounts) as personal investment resource. It is these mechanisms that begin to play a key role in the resource development of education.

Division of Labor in Multi-Business Firms: Human Capital, Job Design, and Labor Contracts

We ask how division of labor is enhanced in multi-business firms. What human capital do the workers acquire, how are their jobs designed, and under what kinds of contracts do they work? To answer t...

Individual labour income, stock prices and whom it may concern

ABSTRACTIn this paper, a panel model which describes the relationship between individual labour income and stock prices in Germany is estimated. The specification allows the individuals to cluster concerning the model parameters that describe first the individual labour income dynamics and second the relationship between the individual labour income and financial markets. Methodically, a Bayesian model-based non-Gaussian panel data approach, proposed by Juarez and Steel (2010a), is used. A group of individuals with a high cluster assignment probability is found. The characteristics of this group, whose individuals share the same autoregressive dynamics and a common, relatively high dependence on financial markets, are investigated further. It can be shown that this group has a statistically significantly different partition of the major occupational groups. This leads to implications for various branches of the literature, such as the pricing of human capital contracts, the hedging of individual income risk, portfolio optimization or asset pricing.

Types of deferred tuition and attempts to establish them in the Czech Republic

The budgets of Czech public universities depend heavily on public finance. Universities face an impossible trinity: all three goals that a country usually wants in university education – greater quantity, higher quality and moderate public spending – cannot be achieved simultaneously. The aim of the article is to discuss possible ways of increasing the share of student payments without reducing the number of students and preventing students from lowincome groups from studying. Human capital contracts, graduated tax and income-contingent loans are introduced with examples of the systems used in Australia and England. The article also contains a list of the reasons why the Czech attempts to establish deferred tuition have failed and the problems that must be solved before another attempt is made.

Return and Risk of Human Capital Contracts

Human capital contracts give private investors the right to a share of students' future earnings in return for a financial contribution during their studies. Although still rarely used, human capital contracts could not only help to complement limited public funding for higher education but might also be an alternative to traditional financial assets. Using a dataset covering 1% of German households for the period 1995-2009, we analyse the return and risk properties that can be expected from human capital contracts. We find that funds of human capital contracts provide low risk exposures to stocks and bonds. As a result, risk-adjusted returns of funds of human capital contracts are significantly positive under fairly weak conditions. Thus, human capital contracts potentially offer large diversification benefits for investors and might be a way to improve the state's educational budget.

Human Capital Contracts in Chile: An exercise based on income data on Chilean HE graduates

Given that a significant proportion of the Chilean education system is financed with household resources, we present human capital contracts (HCC) as an option for higher education financing for students facing financial constraints, but who could use their expected future income flows as collateral. We analyze the feasibility of HCC implementation in Chile over a set of college majors. We find that HCC can partially fund any college major in Chile and finance some majors completely, under certain conditions. Among the variables analyzed, those affecting most severely the contract pricing are initial wage level after graduation and graduation rate.

Human capital contracts for global health

Human capital contracts for global health

The Role of Family Ties for the Optimal Design of Human Capital Contracts

This paper studies the problem of financing a child's primary education when the parent is faced with credit constraints, contracting with minors is not possible and the legal enforceability of contracts is limited – a profound problem in many developing countries. It presents a model in which the empathy of agents towards their kinship (family ties) is endogenized and self-enforcement of contracts is guaranteed through the inter-linkage of credit markets – first a market for education credits, then a market for personal credits such as microcredits. We analyze the impact of increased mobility and anonymity observed in developing societies on the optimal contract design and allow for imperfect information. The main results are as follows: a decrease in information flow (regarding traceability of the whereabouts as well as borrowers' credit history) causes the interest rate of the education credit to always decrease, while the effect on the interest rate of the microcredit is ambiguous. The latter falls if the parent's empathy towards its child is independent of the child's empathy. Furthermore, we find that family ties not only represent an insurance for the family members against financial distress but can also dampen the negative effect of limited enforcement on the lender's payoff.

Evaluating An Alternative To Finance Higher Education: Human Capital Contracts In Colombia.

Se presenta un ejercicio para la valuacion de Contratos de Capital Humano (CCH), siguiendo a Palacios (2004), en el cual se utilizan datos del Observatorio Laboral para la Educacion y su Encuesta de Seguimiento a Graduados–2007. El analisis se hace a traves de un modelo Monteriano y uno de Splines para encontrar los pronosticos deterministicos del ingreso. Se encuentra que los retornos a la educacion superior proveen un incentivo para la implementacion de CCHs para financiar completamente los programas de las universidades publicas y parcialmente en las universidades privadas. Financiar los programas de las universidades privadas requiere mas ayudas para hacer los contratos rentables para los inversionistas y atractivos para los estudiantes.

Deferred and Income‐contingent Tuition Fees: An Empirical Assessment using Belgian, German and UK Data

This paper is a numerical exploration of the following. Assume, in the European Union context, that decision‐makers want to spend more on higher education via higher tuition fees, but also want payments to be deferred and income‐contingent. There are several possible ways to achieve this. First, ask graduates to repay a fixed amount each year if their current net income is above a certain threshold—income‐contingent loans (ICL). Second, ask former students to repay a fixed proportion of their income—human capital contracts (HCC). What are the respective distributional properties of these policies, and how do they compare with traditional financing through income taxation? This paper shows that, irrespective of major variations between countries with different higher education, labour market and fiscal structures, with income taxation non‐graduates pay more that 50% of the increased higher‐education costs. It also shows that the HCC and ICL have vertical equity properties because non‐graduates do not pay, but also because the income contingency principle on which they are based redistributes income among heterogeneous graduates. Finally, the paper shows that HCC are the best way to take account of graduates' ability to pay. It also reveals, however, that the ICL can be made to be almost as equitable.

Paying after Graduation: An Empirical Assessment of Loans with Income Forgiveness and Human Capital Contracts

There are many arguments supporting greater private contribution to higher education costs, particularly in Europe. But this case largely rests on the capability to offer deferred, income-contingent payments and to pool the cost of income contingency among all graduates. The two first features are critical to efficiency - students and lenders should not be deterred by excessive risk - and justice - contributions should be tailored to ex post ability to pay. While cost pooling is essential to avoid public debt classification of student contracts. Examples of instruments satisfying these criteria are loans with income-forgiveness and human capital contracts. The central aim of this paper is to produce realistic estimates of how graduates' lifetime earnings are likely to be affected by the generalisation of these instruments. Using data on Belgian wages, we compute estimates of contributions that these instruments could impose on graduates. We also evaluate their effect on population-wide distribution of lifetime net wages, using higher income tax as a benchmark. The paper further considers the risk of adverse selection inherent to cost pooling. It shows that investing less on students opting for less profitable programs is a simple way to mitigate its severity.

Financial Market in the Czech Republic and Human Capital Investment: Private Financing of Higher Education

In this paper we investigate the possibilities of investing in human capital at the financial market of the Czech Republic. In particular, the conditions for this investment would be different among individuals due to the difference of bequest amount and the credit market condition in financing the money for human capital investment or education. There is also higher risk for possible investors in determining individuals' income and in adverse selection. Our paper deals with the possibilities of avoiding these problems and we use our data from the survey of Czech universities students' earnings expectations collected during the years 2002 - 2004. We use expected returns to education of the Czech higher education students as a benchmark for creating student loans and human capital contracts models. Financial market and institutions should offer different ways of financial assistance. However, financial market of the Czech Republic is not prepared for this type of investment.

Economic Explanations of the Behaviour of Universities and Scholars

Surveys, from an American perspective, the existing literature on economic explanations of the behaviour of universities and scholars. The modern literature is put in historical perspective introduced by a brief discussion of the positions of two of the earliest and most distinguished contributors to the literature: Adam Smith and Max Weber. Discusses the human capital and implicit contracts literatures of the behaviour of scholars, the latter elaborated in terms of the issue of tenure. The most common theoretical economic analysis of the university is the view that it is best thought of as a non‐profit organization. Discusses variants of this view, with special attention to the literature on rent‐seeking in academe. Goes on to the empirical literature on the economics of academe in the areas of academic institutions, academic earnings functions, the earnings and status of minority scholars and academic production functions. Briefly considers the relevance of the current literature to the Althoff system, suggesting that Althoff′s able, trusted advisers, and his system of institutes, may have allowed him to avoid several inefficiences that have been identified by economists as present in other academic institutions. Although the centralization of decision making in the hands of one decision maker may be efficient if the decision maker is exceptionally able, more commonly the most efficient system will be a decentralized system that allows for greater diversity and competition. Concludes with a discussion of how hypotheses on the efficiency (and fairness) of various aspects of the Althoff system could, in principle, be tested.