Human Capital Endowments Research Articles

How do policy measures affect the ability of poverty-stricken households to cope with external shocks? From the perspective of differences in the human capital endowment of households.

Human capital plays a vital role in poverty-stricken households' efforts to cope with external shocks. Improving the human capital of poverty-stricken households to help them address external shocks can enhance the sustainability of poverty-stricken household livelihoods and support poverty alleviation. In this study, households with dependent children and older members were selected from questionnaires covering 6,463 poverty-stricken households from 33 poverty alleviation districts and counties in Chongqing municipality, China. Multiple linear regression model and stepwise regression methods were then used to compare the effects of the number of household members supported and the number of those working on the increase in income among poverty-stricken and nonpoverty-stricken households. Finally, the correlations between policy measures, dependent household members and household labor were examined. The results show the following: (1) Policy measures can alleviate the negative impact of a household's dependent population on household income. (2) Poverty-stricken households' access to policy support is closely related to the characteristics of their human capital. The household's dependent members and laborers are effectively protected by safety net and cargo net policies. (3) Policy measures can mitigate the impact of COVID-19 on the income of nonagricultural laborers while increasing the income of agricultural laborers. The findings show that the ability of poverty-stricken households to overcome poverty and deal with external shocks can be increased by revitalizing rural industries, linking the development of rural industries with the income of poverty-stricken households, and rationally using rural labor resources.

Does agricultural knowledge technical training promote adoption of sustainable agricultural practices?

ABSTRACT The promotion and adoption of sustainable agricultural practices is an important issue in China’s agricultural development policy, particularly because it offers a path to protecting land and water resources to ensure food security. Despite tremendous efforts in encouraging farmers to adopt sustainable agricultural practices (SAPs), adoption has remained low. The lack of relevant information on the use and benefits of these SAPs has been recognized as a major constraint limiting their adoption. Agricultural knowledge and technology training (AKT) could be leveraged to bridge this gap to increase their adoption. Given the paucity of evidence, this study investigates the impact of participation in AKT on SAPs using data on a sample of farmers from Sichuan province of China. We apply the Endogenous-treatment Poisson regression to account for sample selection bias. The empirical results reveal that AKT improved the adoption intensity of SAPs by 74.6%, indicating that policy makers and related stakeholders should provide more agricultural schooling and training to improve farmers’ human capital endowment. These findings have implication on the provision of support for the development of rural policies to promote internet access and basic infrastructure to accelerate the adoption of these multiple sustainable practices.

Entrepreneurship Trainings and Human Capital Endowment: When Learning from External Sources Does (Not) Increase Performance

Abstract Bottom-of-the-pyramid (BoP) entrepreneurs have few resources to draw on besides their human capital. We analyze the effects of a training program teaching lean management to BoP entrepreneurs in Zambia by comparing its performance effects across individuals with high and low levels of specific human capital. We find that participation in the entrepreneurship training program positively affects management practices related to lean management as well as cost reduction for all training participants. The program, however, has no uniform effect on profits. The effect is positive only for entrepreneurs equipped with specific human capital. Moreover, we observe that this effect is in particular strong for entrepreneurs with vocational education compared to work experience. This suggests that the value of entrepreneurship training programs is contingent on human-capital endowment and calls into question existing notions of what it means to offer such programs.

Human capital and innovation in Uruguayan manufacturing firms

PurposeFirms are the primary producers of innovations, and understanding how these agents acquire, update and manage the knowledge of their employees is central to understanding economic growth. However, in developing economies, technology adaptation plays a critical role in innovation compared to knowledge creation. Thus, this research investigates the role of human capital in innovation at the firm level in the case of a small developing economy, which ranks highly on several human capital dimensions but shows declining levels of investment in advanced human capital development in its manufacturing sector.Design/methodology/approachThis research examines the relationship between innovation and human capital at the firm level in a small peripheral economy. The human capital theory is applied to a firm context to understand variations in innovative behavior depending on the size of manufacturing companies. The effect of several human capital dimensions on product innovation is estimated by applying binomial logistic regression models with firm and time-fixed effects.FindingsThis article contributes to innovation economics and public policy by highlighting that not all dimensions of human capital operate similarly for all companies in the context of developing economies. In such settings, technology adaptation plays a critical role in innovation. While employees' human capital endowments significantly impact small firms in that context, firm-level practices such as internal training are crucial for large companies. Consequently, policymakers should consider that firms' human capital endowments impact their innovative behavior differently to avoid one-size-fits-all policy design approaches in this regard.Originality/valuePrior research on the relationship between human capital and innovation in developing economies was based on a cross-sectional approach. This research's unique panel dataset covering 11-year triennial innovation surveys enabled a modeling strategy that controls for time-invariant unobservable firm characteristics. Three aspects of firms' human capital have been analyzed human capital endowments, internal training and human resource management (HRM) practices for the first time longitudinally in a developing economy, enabling to contrast of empirical findings with policy design.

Working from Home, Endogenous Fertility, and Human Capital Accumulation

This paper analyzes the effects of working from home on fertility rate and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider childcare cost and child allowances in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores childcare cost and child allowances, and assumes population size is constant in each period. This study considers human capital accumulation in a model introduced childcare time with endogenous fertility by following Murata (2022). We then consider the effects of working from home on fertility rate and human capital accumulation. This paper is motivated by enforced working from home during the coronavirus (Covid-19) pandemic. We find that if the government increases childcare subsidies, working from home promotes human capital accumulation and economic growth.

Childcare Support Policies, Endogenous Fertility, Human Capital Accumulation, and Dynamics of National Debt

This paper analyzes the interaction among childcare support policies, endogenous fertility, and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider endogenous fertility and child allowances financed by tax or foreign debt in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation and national debt. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores child allowances and assumes population size is constant in each period. This study considers human capital accumulation in a model introduced childcare time with endogenous fertility and assumes that child allowances and childcare services are financed by income tax and national debt. We then consider two childcare support policies―raise child allowances or expand childcare services―and compare the effects of both policies on endogenous fertility and human capital accumulation. Moreover, we analyze dynamics of national debt.

Has the digital economy improved the consumption of poor and subsistence households?

Using Chinese Family Panel Studies (CFPS) database from 2012 to 2018, this paper examines the impacts and transmission mechanisms of the digital economic growth on the consumption of the poor and subsistence households. The results show that the digital economy negatively affects the consumption of the poor and subsistence households, with a more prominent effect on the poor families. Mechanism analysis indicates that digital economic development reduces the consumption of poor and subsistence households mainly by exacerbating the uncertainties they face in labor market (higher unemployment risk and expected income uncertainty) and the inequality of wealth distribution (higher deprivation of income and wealth). Further analyses reveal that the digital economy has greater negative impacts on households with less material, human and social capital endowments, and leads no significant improvements in the consumption environment for the disadvantaged households.

Innovation, asymmetric information and the capital structure of new firms

ABSTRACT Start-ups are essential contributors to economic development, but they often face several barriers to growth, including access to finance. We study their capital structure in their early years of operation through the lens of Pecking Order Theory, exploring how the pursuit of innovation influences firms’ reliance on different types of finance. Panel analyses of 8273 German start-ups show that innovation activities are relevant predict start-ups’ revealed preferences for finance. Effects on the type and order of financing sources depend on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes. New firms focused on research and development activities and with better human capital are less likely to receive informationally complex finance such as debt and will rely relatively more on owner and equity finance. Mixed evidence is found, instead, on the role of new products or processes. Our results suggest that the traditional pecking order theory does not hold for new firms, implying that owner and external equity play a much more prominent role for such firms. Then, managers and entrepreneurs should consider specific sources of finance and financial instruments in light of their innovative activities.

Economic Convergence in the Mexico-United States Cross-border Region: A Post-crisis Analysis 2010–2019

ABSTRACT This research aims to estimate the σ and β convergence hypotheses for the period following the 2008 crisis (2010–2019) in the states of the Mexico-United States border region. The objective is to determine whether the disparities in per capita income have decreased during that period. Panel and spatial panel methodologies are employed to confirm the β-convergence hypotheses, taking into account heterogeneity, spatial dependence, and the endowment of human capital as conditioning factors. The σ-convergence is estimated using standard deviation. The results indicate the presence of σ-convergence and conditional β-convergence. However, a higher endowment of human capital does not necessarily lead to increased convergence rates due to existing differences between the two economies. In conclusion, there is a need to formulate public policies in Mexico that promote educational attainment among the population residing in the northern border region.

Land titling, human capital misallocation, and agricultural productivity in China

Previous studies quantifying the relationship between land titles and agricultural productivity have not explored the role of human capital reallocation. This paper enhances existing literature by examining the effects of land titling on the reallocation of labor with heterogenous human capital endowments between agricultural and non-agricultural sectors. In reference to China's county-by-county rollout of the land titling program, this paper applies a difference-in-differences (DID) framework and finds that farmers with higher human capital are more likely to migrate out of villages following the completion of the titling program, which in turn causes a “brain drain” from the agricultural sector. There is a subsequent decrease in agricultural productivity and output. This productivity loss has not been thoroughly discussed in previous studies and nor considered in the policy making process. Our results indicate that future land reforms should consider the impact of land titling programs on the reallocation of human capital across sectors.

Economic Potential Gain, Income Uncertainty, and Rural Migrants’ Urban Homeownership: Evidence from China

Citizenization of rural migrants is considered as a labeling urbanization goal in developing countries. Homeownership has always been regarded as the most important cornerstone of citizenization for individuals and families in China. Despite the existence of plenty of literature on migrants’ homeownership, some critical influencing factors are still under-investigated. On the basis of the large nation-wide micro data of the China Migrant Dynamic Survey (CMDS), this study investigates the correlations among economic potential gain, income uncertainty, and rural migrants’ homeownership propensity in their host cities. The empirical results suggest that economic potential gain is positively correlated with the likelihood of rural migrants’ homeownership in their host cities, whereas there is negative association between income uncertainty and urban homeownership propensity among rural migrant households. In addition, we found that larger income uncertainty lowers the positive association between economic potential gain and rural migrants’ homeownership propensity in their host cities. Furthermore, the heterogeneity of these correlations across demographic characteristics and regions were investigated. We conclude this paper by making several suggestions, including offering a level playing field for rewarding migrants’ human capital endowment reasonably in terms of income, accelerating the hukou system reform, and eliminating institutional discrimination imposed on rural migrants to increase income stability.

Protecting Poor Rural Households from Health Shocks: Poverty Alleviation Practices in Chongqing, China

In certain low- and middle-income countries, information asymmetry, human capital damage and long-term economic decline are longstanding problems in health-related poverty alleviation. Notably, China’s Targeted Poverty Alleviation program sheds new light on resolving these problems. Based on existing paradigms in the poverty research area, the purpose of this paper is to summarize and explore the roles of Chinese support policies in poor rural households coping with health shocks. Using a questionnaire survey of 4635 poor rural households in a municipality in Southwest China conducted from December 2018 to January 2019, this study examines the relationships between health shocks, human capital, support policies, and per capita household income. The results show that (1) apart from safety nets and cargo nets, monitoring nets are formed in China’s poverty alleviation practice, which could resolve the problem of information asymmetry. (2) Health shocks do not cause poor rural households to fall back into poverty. The reason for this is that safety net and cargo net policies are provided to relevant poor rural households by considering household human capital endowments and the information received from cargo nets. Through this method, patients can obtain effective support and caregivers can obtain off-farm employment opportunities. Thus, the ability of poor rural household human capital to resist health shocks is enhanced. (3) With the support of these policies, the negative effects of dependent family members and agricultural laborers on per capita household income are reversed. Thus, the long-term increase in poor rural household income is also ensured. These findings hold great value for other developing countries coping with health shocks and formulating anti-poverty policies.

On the black-white gaps in labor supply and earnings over the lifecycle in the US

In the US economy, Black men, on average, receive lower wages than White men, and the difference increases over the working life. The employment rate and the number of hours worked are also lower for Blacks, but the gap is nearly constant. Together these facts suggest that on-the-job human capital accumulation might explain the diverging wages. However, the wage gap and its evolution over the lifecycle cannot be explained by differences in accumulated experience or educational attainment for the cohort we analyze. Instead, the combination of experience and test scores measured at ages 17-22 accounts for the wage gap and its growth. We propose an on-the-job human capital accumulation model with heterogeneity in the initial human capital endowment and the lifelong ability to accumulate human capital, and endogenous labor supply at the extensive and intensive margins to explain the evolution of the Black-White wage gap over the lifecycle. We discipline the distribution of the ability to accumulate human capital using the power of test scores to predict earnings growth in the data. We find that if the pre-market distributions were the same for Blacks and Whites, the racial gap in hourly earnings would be closed by 84%, with the remaining gap opening throughout life due to higher labor supply amongst White men. That is, the unequal conditions with which men in the two groups enter the labor market are likely to be the key determinant of the differences over the lifecycle.

The Nexus between Poverty, Inequality and Growth: A Case Study of Cameroon and Kenya

Abstract We conduct an in-depth analysis of the nexus between inequality of opportunity and inclusive growth in Cameroon and Kenya employing cross-sectional data collected over two time periods in each country. Empirical results show that changes in education, health and labour market endowments have large effects on household economic well-being, as proxied by total expenditures per adult equivalent. Employing the regression-based decomposition, we find that effort-based variables are associated with greater Gini inequality compared with circumstance-based variables—more so for Cameroon than Kenya. Among the effort-based variables, education in Cameroon and health in Kenya, are the main correlates of income inequality. The factual and counterfactual distribution analyses undertaken demonstrate that equalisation of human capital endowments is strongly inequality-reducing and further promotes pro-poor growth. Meanwhile, elimination of circumstance disparities in Cameroon reduces Gini inequality, enhances pro-poorness of the growth process, promotes shared-prosperity in urban areas and reduces inequality between the tails of the distribution of well-being. In Kenya, elimination of circumstance-based disparities is pro-poor improving, shared prosperity enhancing, but Gini inequality augmenting. In contrast to the Cameroonian case, equalisation of circumstances increases inequality between the tails of the distribution of well-being. The mechanisms behind these findings are probably the country-specific redistributive policies.

Mind the gap: an empirical analysis of pay discrimination in Hollywood

PurposeThis study aims to identify and explain a possible gender pay gap in the creative industry. By using the salary information of Hollywood actors, this paper restricts the analysis to a relatively homogenous group of workers. In addition, actors' human capital endowments and past performance can be measured precisely. The factors that impact the salaries of movie stars are likely to influence the pay of other high-wage employees, such as athletes and executives.Design/methodology/approachThis paper uses a rich panel data set including 178 female and male actors in 973 movies released between 1980 and 2019. Using a random-effects model and the Blinder–Oaxaca decomposition approach, this paper distinguishes between a fraction of the gender pay gap that can be explained and another fraction that cannot be explained. Hence, only the unexplained residual typically obtained by estimating two standard Mincer-type earnings functions is due to discriminatory pay practices.FindingsThis study reveals a pay difference between female and male actors. Gender-specific representation in leading roles and systematic differences in performance measures can explain this pay difference. While female actors' underrepresentation in leading roles reflects consumer tastes and, therefore, reflects discriminatory attitudes, no evidence can be found for direct pay discrimination in Hollywood's movie business.Originality/valueTo the best of the authors’ knowledge, this is the first Hollywood study to relying on a rich panel data set that includes various measures of the human capital characteristics of the different individual actors. This paper's theoretical contribution lies in applying classic labor economics reasoning to explain pay determination in Hollywood's movie business.

A joint spatial econometric model for regional FDI and output growth.

This paper studies the joint dynamics of foreign direct investments (FDI) and output growth in European regions by using spatially augmented systems of equations modeling framework that incorporates third-region and spillover effects. The joint framework is used to study the dynamic impacts of regional human capital endowments, which demonstrates the importance of explicitly accounting for an endogenous relationship. The relationship is highlighted in a stylized projection exercise, where the long-run impacts are pronounced in Eastern Europe and capital cities. Overall, ignoring the relationship of regional economic performance and FDI distorts the implied transmission mechanism, which is of utmost importance for policy makers.

A qualitative and quantitative approach to the drivers of economic growth in the EU

This study assesses the effects of human capital (focusing on highly educated immigrants), knowledge creation, and global governance quality on economic output (proxied by gross domestic product [GDP] per capita) for EU member states between 2000 and 2020. First, we use a qualitative approach to emphasise the connections between GDP per capita and various determinants of economic growth by performing a social network analysis [SNA]. The results reveal that the three most important features of each network are a high GDP per capita, governance quality, and human capital endowment (low scenario, respectively). Second, we use quantitative data with which we run different econometric models, such as robust regression analysis, generalised method of moments (addressing endogeneity issues), and structural equation modelling. We find that all the regressors have a significant influence on GDP per capita, with the greatest magnitude exercised by tertiary-educated immigrants (valuable resources acquired by destination countries), followed by knowledge and governance quality indicators. These results remain robust to several changes in the empirical estimation techniques.

Childcare Support Policies, Endogenous Fertility, and Human Capital Accumulation

This paper analyzes the interaction among childcare support policies, endogenous fertility, and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider endogenous fertility and child allowances in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores child allowances and assumes population size is constant in each period. This study considers human capital accumulation in a model introduced childcare time with endogenous fertility and assumes that child allowances and childcare facilities are financed by income tax and childcare fee. We then consider two childcare support policies―raise child allowances or expand childcare facilities―and compare the effects of both policies on endogenous fertility and human capital accumulation.

Exogenous Wage Decline, Utility Changes, Endogenous Fertility, and Human Capital Accumulation

This paper analyzes the effects of wage decline by exogenous economic shock and individuals’ utility changes on fertility rate and human capital accumulation using an overlapping-generations model, which is mainly based on Groezen, Leers and Mejidam (2003) and Cardak (2004). Although Groezen, Leers and Mejidam (2003) consider childcare cost and child allowances in a model of a small open economy, they ignore educational expenditures and do not analyze human capital accumulation. Although Cardak (2004) considers human capital accumulation and assumes it is determined by governmental or parental expenditures on education and by parent’s human capital endowments, he ignores childcare cost and child allowances, and assumes population size is constant in each period. This study considers human capital accumulation in a model of a closed economy with endogenous fertility. We then consider the effects of declining wage rate on fertility rate, human capital accumulation, and economic growth when an individual’s preferences for his consumption change. This paper is motivated by declining birthrate by the cost burden of educational expenses and wage decline by the coronavirus (Covid-19) pandemic in Japan. We find that increased preference for consumption of individuals decreases the number of children (reduce fertility rate), constricts human capital accumulation, and surely impairs economic growth when wage rate declines by exogenous economic shock.

Enhancing Livestock Productivity in the Desert Ecologies of Pakistan: Setting the Development Priorities.

Livestock is now sharing by more than 53 percent of total agricultural value added in Pakistan. Identifying and developing the potential areas of livestock production is part of the overall development strategy for this sector while rural poverty alleviation is a major concern of Pakistan’s overall development policy. Our major livestock production systems are grazing, stall-fed and grazing-cum-stall-fed based. Grazing based livestock farming is economical and customary system in mountainous, rainfed, deserts and salinity affected areas. The livestock herders of desert areas deserve special attention of the policy-makers because of their most deprived living conditions as majority is living below poverty line by all poverty measuring standards. The present study is aimed to generate an updated synthesis based on empirical knowledge about status of livestock farming in desert ecologies of Pakistan. The results show that the average herd sizes maintained by the herders is fairly large to cover losses due to drought, disease and other epidemics. The human and physical capital endowments of the farmers are generally poor. Other common characteristics are: major dependence on natural vegetation with limited supply of fodder, more physical exertion of animals during grazing, poor animal health, practicing natural method of breeding, low milk and meat productivity, highly limited livestock and milk marketing opportunities, etc. The stall feeding is mainly composed of dry stalks and straws of different crops along with a small quantity of food grains. On marketing side, because of location and lack of infrastructure support, milk marketing opportunities are meager, therefore, it is converted into desi ghee—a value added and preserved form which is sold in nearby town markets. In marketing of live animals, the farmers are always exploited by beoparies. On average herd size, the net monthly income in Cholistan desert from cattle (for milk), sheep and goats farming (for meat purpose) was Rs 10128, Rs 990 and Rs 508, respectively; for Thal desert the corresponding estimates were Rs 457, Rs 359 and Rs 552, respectively; and for Tharparkar, the corresponding estimates are Rs 918, Rs 3221 and Rs 331, respectively. There is a strong need of prioritising development efforts for desert ecologies. High priority areas include efforts for increasing availability of rangeland vegetation and green fodder, improvement in the genetic potential of local livestock breeds, provision of more efficient livestock health coverage, and establishment of milk collection centres of milk processing plants. The low priority areas include designing regulatory framework for milk and livestock marketing, programs for human capacity building, facilitating through institutional credit, and different incentives for the veterinary staff posted in such areas. JEL classification: Q130, Q190, Q200 Keywords: Desert, Tharparkar, Thal, Cholistan, Livestock Farming, Livestock Feeding Patterns, Feed Composition, Livestock Trade Intensity, Priority Setting.