Low Human Capital Research Articles

Empowering energy access: Exploring financial inclusion's impact on energy poverty in the fragile five economies

Energy poverty is a major issue that deepens economic challenges, especially in the five fragile states of Turkey, Brazil, South Africa, India, and Indonesia. The objective of this study is to examine the impact of financial inclusion on energy poverty, as removing financial barriers to energy access and utilisation is critical for sustainable development. The study hypothesizes that financial inclusion plays a decisive role in alleviating energy poverty. The study analyses the second generation panel methods such as AMG, Driscool-Kraay, and FMOLS using annual data from 2000 to 2021 and examines the causal relationships between variables using Dumitrescu-Hurlin panel causality test. The findings reveal that financial inclusion, low carbon technology trade, energy efficiency, economic growth, and human capital play a central role in alleviating energy poverty in these economies. On the other hand, a unidirectional causal relationship was found between financial inclusion and low carbon technology trade, human capital, energy efficiency, and energy poverty. In contrast, a bidirectional causal relationship was observed between economic growth and energy poverty. These findings provide important insights for policymakers and stakeholders; understanding the complex dynamics between financial inclusion and energy poverty can help design targeted strategies to increase energy access and promote inclusive economic development in fragile economies.

Resource dependence and life expectancy in sub-Saharan Africa: Does financial sector stability break the curse?

Natural resource wealth can contribute to human and economic development if the revenues from natural resource sectors are effectively invested by the government. In particular, countries with abundant natural resources have the potential to experience significant development and improvements in their quality of life. This study first examines the impact of natural resource rents on life expectancy in sub-Saharan Africa. We then investigate the moderating role of the financial sector in this relationship. Using mainly the Generalized Moments Method in a panel of 44 Sub-Saharan African countries over the period 1990–2021, the results obtained in this paper reveal a negative effect of natural resource rents on life expectancy, supporting the resource curse-health hypothesis. However, the stability of the financial system moderates this relationship and makes it positive, at specific thresholds. These results are consistent with Hirschman's conjecture that production leakage is low in landlocked countries, but that there are stronger links with public revenues than with other sectors of activity. The ‘wealth channel’ lubricated by the financial sector that this study identifies calls for greater caution when adopting non-rentier policies in countries exploiting their natural wealth, specifically countries with low human capital. We suggest that a portion of resources should be allocated to financing human capital in order to increase life expectancy.

Digital transformation, total factor productivity, and firm innovation investment

In the context of the digital economy, empowering firm innovation investment through digital transformation is an important strategy for promoting innovation development in China. This study investigates the effects and mechanisms of digital transformation on firm innovation investment from the perspective of total factor productivity, using a sample of manufacturing companies listed on the A-share market in China from 2012 to 2021. The following three main findings were obtained. First, results of both fixed- and random-effects regression methods revealed that digital transformation significantly promotes firms’ innovation investment. This conclusion remains robust after controlling for endogeneity issues using the instrumental variable method and replacing the explanatory variable measurement methods. Second, stepwise regression analysis revealed a negative mediating mechanism of total factor productivity (TFP) in the impact of digital transformation on the level of firm innovation investment. The main reason for this is that an improvement in TFP intensifies the competition for capital and labor input between the production and innovation departments. Third, the group regression for heterogeneity analysis found that the overall effect of digital transformation on firm innovation investment is significantly positive in groups with low financing constraints and high human capital, but not significant in groups with high financing constraints and low human capital. Moreover, the negative mediating mechanism of TFP is significantly valid in all groups, further validating the competition between the production and innovation departments for capital and labor input. Based on the findings of this study and from the perspective of governance by the Chinese government, three policy recommendations are proposed to empower firm innovation development through digital transformation.

RACIAL AND NATIVITY DIFFERENCES IN ADVERSITY PROFILES AMONG MIDDLE-AGED AND OLDER ADULTS

Abstract Cumulative adversity theory explains how distribution of resources and stress accumulate over time, resulting in divergent later life outcomes. Focusing on the nexus of race and nativity, this study examined profiles of adversity (i.e., the overall typological patterns of adversity) and their mental health implications in four groups of middle-aged and older adults: native-born whites, native-born ethnic minorities, foreign-born whites, and foreign-born ethnic minorities. Data were from the 2018 psychosocial assessment of the HRS (N = 5,534). Latent class analysis (LCA) with multigroup analyses were employed to identify typological patterns of ten adversity indicators and to compare the latent structures and class prevalence across the race/nativity groups. Regressions were used to examine the associations between adversity profiles and three outcomes: depression, pessimism, and life satisfaction. adversity profiles emerged: low adversity (60.05%), low human capital (15.69%), socially marginalized (13.67%), and neighborhood adversity (10.59%). These adversity profiles were structurally the same for the four race/nativity groups, but the class prevalence varied across the groups. Overall, having low adversity profile was associated with the best mental health outcomes. However, the mental health implications of each adversity profile varied by outcomes and by race and/or nativity. Findings highlight the importance of examining heterogeneity in adversity and its mental health implications among disadvantaged populations and the need of developing tailored programs to address unique needs of different minority populations.

Immigration and health outcomes: A study on native health perception and limitations in Europe

This study examines the impact of immigration on the self-perceived health of natives in 16 European countries from 2006 to 2018. Utilizing data from the European Union Statistics on Income and Living Conditions (EU-SILC) and the European Union Labor Force Survey (EU-LFS), we focus on two health outcomes: natives’ self-perceived health and health-related limitations in daily activities. Contrary to concerns, our findings indicate a positive influence of immigration on natives’ health perception and a reduction in health-related limitations. Noteworthy variations by gender and age emerge, with more pronounced benefits in countries with lower human capital. These results underscore the potential health advantages of immigration, emphasizing the necessity for nuanced immigration policies that consider societal impact and call for a comprehensive evaluation of immigration’s effects.

Remittances and economic growth: a blessing for middle-income countries, ineffective for low-income countries

PurposeThis study investigates the impact of international remittances on the economic growth of remittance-receiving countries, using data from 113 developing countries between 1990 and 2015.Design/methodology/approachThe authors used a novel approach to address the potential endogeneity of remittances. The authors estimated bilateral remittances and use them to create weighted indicators of remittance-sending countries, which the authors then use as instruments for remittance inflows to remittance-receiving countries.FindingsThe results indicate that while remittances have a positive impact on economic growth in developing countries with high human capital, they do not contribute to growth in developing countries with low human capital. The authors also examined the channels through which remittances affect growth. The findings suggested that remittances do not impact labor supply in developing countries with high human capital, but they reduce labor supply in countries with low human capital. Additionally, remittances increase investment in physical capital in developing countries with high human capital, but they do not have an effect on investment in developing countries with low human capital.Originality/valueThe authors investigated the impact of remittances on economic growth using a novel approach to address the endogeneity of remittances. Additionally, the authors examined the different indirect channels through which remittances can impact economic growth, such as their effect on labor supply and investment.

Welfare Reform and the Quality of Young Children's Home Environments

This study investigates the effects of welfare reform—a major policy shift in the United States that increased low-income mothers' employment and reliance on earnings instead of cash assistance—on the quality of the home environments mothers provide for their preschool-age children. Using empirical methods designed to identify plausibly causal effects, we estimate the effects of welfare reform on validated survey and observational measures of maternal behaviors that support children's cognitive skills and emotional adjustment and the material goods that parents purchase to stimulate their children's skill development. The results suggest that welfare reform did not affect the amount of time and material resources mothers devoted to cognitively stimulating activities with their young children. However, it significantly decreased emotional support provision scores, by approximately 0.3–0.4 standard deviations. The effects appear to be stronger for mothers with lower human capital. The findings provide evidence that welfare reform came at a cost to children in the form of lower quality parenting. They also underscore the importance of considering quality, and not just quantity, in assessing the effects of maternal work-incentive policies on parenting and children's home environments.

Racial/ethnic and nativity differences in adversity profiles among middle-aged and older adults

Objectives Focusing on the nexus of race/ethnicity and nativity, this study examined profiles of adversity and their mental health implications in five groups of middle-aged and older adults: native-born whites, native-born blacks, native-born Hispanics, foreign-born whites, and foreign-born Hispanics. Methods Data were from the 2018 psychosocial assessment of the HRS (N = 5,223). Latent class analysis (LCA) was employed to identify patterns of eleven adversity indicators and to compare the latent structures and class prevalence across the race/ethnicity and nativity groups. Regressions were used to examine the associations between adversity profiles and depression and life satisfaction, respectively. Results Four adversity profiles emerged: low adversity (59.84%), low human capital (15.27%), socially marginalized (15.26%), and neighborhood adversity (9.63%). Regardless of nativity status, white older adults were most likely to have the low adversity profile (74 ∼ 75%). In contrast, all the racial/ethnic minority groups were more likely to have the other three adversity profiles. The adversity experienced by racial/ethnic minorities was further cofounded by their immigration status. Overall, having low adversity was associated with the best mental health outcomes and socially marginalized had the poorest outcomes. Even with the low adversity profile, native-born blacks had significantly more depressive symptoms than native-born whites. Conclusion Findings revealed heterogeneity in adversity profiles and their mental health implications in disadvantaged aging populations. Tailored programs are needed to address unique needs of different minority populations.

Can rural cooperatives reduce poverty vulnerability of smallholder households? Evidence from rural Western China

IntroductionPoverty eradication is one of the global challenges, and rural cooperatives provide an effective path to address smallholder households’ poverty. However, the effect of poverty reduction can show heterogeneity depending on the economic capital, human capital, and social capital of households.MethodsBased on comprehensive research data on the poverty status of 1,622 smallholder households in four provinces in the less developed regions of western China, using OLS and PSM models, this paper empirically analyzes the impact and heterogeneous characteristics of rural cooperatives on the poverty vulnerability of smallholder households.Results/DiscussionThe results show that rural cooperatives have a significant dampening effect on the poverty vulnerability of smallholder farmers, and the findings hold true after robustness tests using multiple methods. The impact of rural cooperatives on the poverty vulnerability of farming households differed significantly across smallholder households with different characteristics. Specifically, participation in cooperatives had a more pronounced effect on reducing poverty vulnerability among non-poor, higher human capital and higher income farm households compared to poor, lower human capital and lower income farm households. The results of the study can provide a useful reference for policy-making on rural mutual assistance and poverty reduction among farmers.

Household constraints and dysfunctional rural–urban migration

This paper aims to explain why over the past two decades in Chile internal rural–urban migration has not worked as an effective equalizing mechanism for territorial income disparities. In view of this aim, we investigate how labor market incentives and non-market barriers structurally affect migration. Based on national household surveys, our empirical strategy controls for the self-selection of working migrants, allowing the estimation of a non-endogenous earnings differential while relying on a consistent poverty identification at the origin. On the one hand, our results show that earning differentials observed by potential working migrants encourage migration. However, on the other hand, the household-level constraints of the potential working migrant, such as stayers’ welfare, might work as a pull or push factor. Thus, we are in the presence of a market failure in which migrants are not strictly those who could profit most from labor market differentials but rather those who are not constrained by poverty and the low human capital of their families. Consequently, this market failure explains the ineffectiveness of migrations as an welfare-equalizing mechanism, shedding light on the type of public policies needed to achieve more functional migration flows.

A Nuanced Analysis on Livelihood Resilience of Vietnamese Upland Households: An Intersectional Lens of Ethnicity and Gender

“How to gauge the resilience of a household’s livelihood?” and “who is resilience for?”; as the world’s volatility increases, especially with unprecedented changes in climate, interest in these questions continues to rise. While many previous conventional attempts to measure resilience at the household level have largely employed the “objective” top-down framework relying mostly on a macro observed socioeconomic dataset, this present work seeks to estimate household resilience through an alternative bottom-up method, called the “subjective” resilience approach. With specific reference to the context of two ethnic Pa Cô and Tà Ôi minorities living in upland areas of Central Vietnam, this study aims to (1) measure household resilience to climate change by scoring five livelihood capitals, financial, human, social, physical, and natural, by applying the Household Livelihood Resilience (HLR) framework; and (2) provide an intersectional lens of ethnicity and gender in relation to the household’s livelihood resilience. To achieve these goals, in addition to two focus group discussions and eleven in-depth interviews, an empirical survey of 236 households was conducted between September to December 2021. Our findings indicated that there are differences in observed livelihood resilience among the ethnic minority groups and, within that, between gender (sex, status) factors. Ethnic women and poor households have a lower resilience than other groups in society due to their lower human capital and limited access to public and financial resources, which are to some degree linked to the difference in the gender division of labor and the cultural norms of patriarch traditions. This study highlights the importance of considering gender and poverty in resilience-building efforts and offers insights for future programs in multi-ethnic developing countries such as Vietnam.

BRIGHT STUDENTS IN ISLAMIC PRIMARY SCHOOL FROM LOW INCOME FAMILY

Learning is influenced by resources, context, and student input. High-achieving students who come from underprivileged families have supportive social capital to make up for the low financial and human capital in their families. The question addressed in this article is how to increase social capital in low-income families. This is a qualitative study. Data was collected by interviewing 63 informants, consisting of 28 parents and 35 high-achieving Islamic primary school (madrasah ibtidaiyah and madrasah tsanawiyah) student from underprivileged families in South Kalimantan.The study's findings indicate that trust in the family is unable to emerge and grow as a result of various statements and treatments of parents and other family members toward children. These statements and actions are reflected in parental concern, feelings of security, honesty and integrity, openness, reliability, and competence in the family. Expectations in poor families are relatively unsupportive. The general trend among poor families is that they have low expectations for the future. But hope will grow if parents have broad insights and views. Relationships between generations are built through the togetherness of parents and children and the communication and joint activities that are often carried out between family members. Communication is the most basic thing in building social capital in the family.

An analysis of the effect of temporary/permanent contracts on firm efficiency performance: evidence from South Korea

PurposeBecause no international accounting policy exists to mandate human capital (HC) information must be reported on financial reports, the association between workforce HC and firm performance/efficiency is not well-established. South Korea is a rare example with high HC reporting quality, as well as relatively high national productivity. On the other hand, in some developed countries (such as the UK), HC reporting quality and productivity is low. Moreover, there is an increasing propensity to offer employees non-standard contracts. Thus, because of a divergence in HC reporting quality internationally, the South Korean sample can provide valuable insights to countries with weak HC reporting quality about the association between contract quality and firm performance/efficiency.Design/methodology/approachUsing a sample of Korean listed firms (2010–2015), pooled Ordinary Least Squares (OLS) regression analysis is conducted to show whether firms that offer employees higher levels of permanent, relative to temporary contacts, demonstrate higher firm performance/efficiency.FindingsFirms that provide employees with increasing permanent (temporary) contracts experience higher (lower) performance/efficiency.Research limitations/implicationsThis research is limited due to sample selection. However, the sample represents the population of all firms that report contract type information in South Korea, a market with highly robust HC information reporting.Originality/valueBecause of data unavailability, a positive association firm-level performance/efficiency and permanent employment can only be made in a handful of countries. The study has policy implications and extends the non-financial reporting literature by addressing HC reporting limitations that exist in the mainstream accounting framework. Based on relative operational efficiency/performance, the study offers practical insights to management about the importance of staff retainment. Moreover, the authors also offer an anthropocentric perspective by inferring how low HC reporting quality can have a negative impact on society in Industry 4.0.

Barred: Labor Market Dynamics and Human Capital Development among People on Probation and Parole

Obtaining employment is a major barrier to social reintegration for people on probation or parole. Research on the reentry process identifies several mechanisms that accentuate difficulties in locating work, including human capital development, structural changes in the labor market, and onerous probation and parole conditions. In this article, we review theories that explain low labor market participation rates among people reentering society, and we draw on multiple sources of data to identify the types of jobs that are available to people with low human capital. We find that nearly a quarter of people in America’s state and federal prisons had permanently removed themselves from the formal labor market before their most recent arrest; however, exclusionary hiring practices in the formal labor market often push those carrying the stigma of a criminal record into underground or informal labor markets, where wage rates are markedly higher than the federal minimum wage. Our findings demonstrate that severe and chronic employment struggles often predate and follow incarceration. We provide a detailed discussion of policy reform proposals that could help to remedy this harmful dynamic.

Sustainability and Gender Inequality within Handloom Value Chains

This paper empirically examines how and to what extent global value chains have impacted on the sustainability and gender inequality within the handloom value chain. The handloom sector in India contributes significantly to trade and offers livelihood opportunities to more than thirty three million workers. Traditionally, the handloom value chain involves family labour and women constitute a major portion of the handloom workforce in India. In this context, we examine both sustainability and inequality in terms of gendered labour relations in socio-economic mobility by giving a complete picture of the handloom value chain. The analysis is based on responses of 500 handloom workers employed across the Handloom Mega Cluster of Banaras’ in India. The conceptual and analytical framework of the global value chains (GVCs) is used to analyze the transitional nature of insertion of economies in the global production and distribution process. Findings highlight the lack of capacity upgradation, as most of the handloom household workers face survival vulnerability and remain trapped in poor wellbeing due to low human capital, low productivity, and low income. In contrast to male workers, women workers are found at more disadvantage as they face social constraints and discrimination in access to market and welfare schemes.

Does Digital Financial Inclusion Reduce China’s Rural Household Vulnerability to Poverty: An Empirical Analysis From the Perspective of Household Entrepreneurship

This paper evaluates the impact of digital financial inclusion (DFI) powered by digital technologies on rural household vulnerability to poverty based on data from the China Family Panel Studies (CFPS) and DFI data from the Institute of Digital Finance Peking University. The results show that both DFI and its secondary indicators reduce rural household vulnerability to poverty. Household entrepreneurship is an intermediary factor of DFI influencing vulnerability to poverty; that is, DFI stimulates rural households’ entrepreneurial behavior, thereby reducing their vulnerability to poverty. Through the analysis of income heterogeneity, financial development level, and human capital in the region, it is found that DFI is more helpful in reducing the vulnerability to poverty for rural households with low income, a low level of financial development and low human capital. Therefore, the Chinese government should map out the DFI development path, build a DFI control system with internet technologies, and actively play the mutually supporting role of DFI and other influencing factors to boost DFI development, minimize the risk of returning to poverty and thereby reduce rural household vulnerability in China.

Demographic Dividend: An Asset for India

Demographic dividend is the acceleration in the economic growth which is brought about as a result of a fall in fertility and mortality rate in the population of a country. This leads to a subsequent change in the age structure of the population of a country. With the decline in the birth rate, the young dependent population of the country declines in relation to the working age population. Due to an increase in the productivity of working population, the per capita income of a country rises. It is the period during which the population of the country experience the age structure that is highly favourable for development. India has more than half of its population falls in the age group of working population which is young, i.e. 15 to 64 years and also the most potential and productive as a human resource. Hence, demographic dividend can be an asset if it is used reasonably and rationally. This will lead to expanding the labour force, the level of urbanisation and industrialisation and henceforth creating rapid development of the country. The expanded workforce increases the efficiency of the country’s economy. The main aim of the paper is to discuss the trend of demographic dividend with respect to population structure and composition in India and also to understand the existing governmental policies and programmes for promoting youth to benefit as demographic dividend for economic growth of the nation. For this study, population data from various sources such as Census Data of India and world population data for various years has been collected. The data is then tabulated, analysed and represented through line graph, bar graph and pyramids. There are certain challenges which India will face during this phase of demographic dividend which includes informal economy, low human capital, and even demography and unskilled labour. Various suggestions to combat these challenges have been suggested.

The Impact of Commercial Insurance on Household Financial Vulnerability

This research examines the effects of commercial insurance on household financial vulnerability using data from the China Household Finance Survey (CHFS). Data were collected from 39875 households in 29 provinces of China. The probit model was used to test the relationship between the study variables. The results show that commercial insurance participation reduces the likelihood of a household’s financial vulnerability. Heterogeneity analysis found that commercial insurance participation had a more significant dampening effect on the financial vulnerability of households with low personal expenses, low-income, low human capital, rural areas, and the central and western regions, indicating that commercial insurance has a universal effect. This study offers several policy implications for combating household financial vulnerability. First, improving the commercial insurance protection system in both urban and rural areas could improve households’ risk management capacity. Second, establishing tax-rewarding policies to encourage households to participate in commercial insurance. Third, increasing the popularity of commercial insurance, particularly in rural areas, and exploring the rural commercial insurance market.

The Impact of Commercial Insurance on Household Financial Vulnerability

<span>This research examines the effects of commercial insurance on household financial vulnerability using data from the China Household Finance Survey (CHFS). Data were collected from 39875 households in 29 provinces of China. The probit model was used to test the relationship between the study variables. The results show that commercial insurance participation reduces the likelihood of a household's financial vulnerability. Heterogeneity analysis found that commercial insurance participation had a more significant dampening effect on the financial vulnerability of households with low personal expenses, low-income, low human capital, rural areas, and the central and western regions, indicating that commercial insurance has a universal effect. This study offers several policy implications for combating household financial vulnerability. First, improving the commercial insurance protection system in both urban and rural areas could improve households' risk management capacity. Second, establishing tax-rewarding policies to encourage households to participate in commercial insurance. Third, increasing the popularity of commercial insurance, particularly in rural areas, and exploring the rural commercial insurance market.</span>

Global Value Chain Formation and Human Capital: Case of Korea and ASEAN

Purpose &#8211; This study discusses the effects of human capital in the formation of GVC linkages. We also investigate GVC intensity between Korea and ASEAN. Design/methodology &#8211; To solve the doubling-counting problem in evaluating comparative advantage, RCA has been re-computed using domestic value-added (henceforth RCA_VA) at the country-sector level instead of value of trade. The impact of human capital on GVC intensity was empirically analyzed by establishing a panel data set with four industries (ISIC Rev. 4) in eight ASEAN countries from 2005 to 2015 from OECD-TiVA and WDI. Findings &#8211; The empirical results show that human capital has a negative effect on GVC intensity in the agriculture and manufacture industries, while it has a positive effect in the service and information industries. The results do not mean that low human capital is a barrier and inefficient to GVC linkages. Low Value-added activities may be more profitable to some emerging countries. These findings suggest that it is important to accurately identify the competitive elements to increase gains from trade under the GVC. Also, it shows that comparative advantages can be misled by an RCA index evaluated in trade volume under the GVC. Originality/value &#8211; This study highlights the importance of human capital as a factor for the efficient formation of Global Value Chain (GVC). This study has different from the literature in analyzing the role of human capital in formation of linkage of the GVC. And we clarify the changing patterns of trade by removing the double-counting problem under the GVC.