Predictions Of Human Capital Theory Research Articles

Do students take the predictions of human capital theory into account? An analysis of motives behind further studies in higher education

AbstractIn this paper, we seek to answer the research question as to whether students take into account the predictions of human capital theory (namely the higher wages associated with further studies) in their decision to participate in higher education. Our alternative research question is whether students can be described by Bourdieu's theory on capital conversion, that is, whether they aim to accumulate cultural and social capital during their studies, which can also be profitable for them in the future. Our research method is quantitative: we use cluster analysis to examine the motives behind further studies and employ cross tabulation and variance analysis to reveal the relationship between clusters and social background variables. We find that the wage premium associated with further studies is not the most important motive among students; it holds only minor importance even for those from a disadvantaged social background. The results suggest that students in secondary schools, especially talented but underprivileged ones, should be motivated to enter higher education by informing them about the potential wage premium they can attain if they study further. Importantly, we also find that underprivileged students may be unaware of the fact that higher education is an efficient mechanism to accumulate social and cultural capital, which then can be converted into economic capital.

Back to school: An application of human capital theory for mature workers

There is a vast literature on the decision to enroll in higher education, but it focuses almost entirely on traditional students: 18 year olds graduating from high school. Yet less than half of students at degree-granting institutions are in the traditional 18–22 age range; nearly 40% are at least 25. This paper examines the enrollment behavior of persons 25 or older. We use data from a large-scale 1998 Department of Labor (DOL) policy demonstration in Greater Baltimore. By studying the behavior of older people we can examine factors such as age, earnings and marital status that vary little among the much-studied traditional students. Our results conform to the (rarely tested) predictions of human capital theory that age and opportunity costs are impediments to enrollment. We also find that where you live has a substantial impact on whether you return to school.

Men at Work in a Land Down-Under: Testing Some Predictions of Human Capital Theory

We use new training data from waves 3–6 of the Household, Income and Labour Dynamics in Australia Survey to investigate training and wages of full-time men. We explore the extent to which the data are consistent with the predictions of human capital theory or with recent alternative theories based on imperfectly competitive labour markets. According to the raw data, most work-related training received by full-time private-sector men is general, but it is also paid for by employers. Our fixed effects estimates reveal that this training is associated with higher wages in current and in future firms, and that the effect in future firms is larger and more precisely determined. These results are more consistent with the predictions of human capital theory based on imperfectly competitive labour markets than with the alternative of perfect competition.

Search strategies of the unemployed in the Russian Federation

PurposeThe purpose of this paper is to examine the effectiveness of job search and human capital of the unemployed in the Russian Federation for obtaining a job the following year.Design/methodology/approachCross‐sectional data on human capital and job‐search strategies from different years of the Russian Longitudinal Monitoring Survey are used in different probit specifications to present and analyse empirical results.FindingsSearching through friends and directly are the most common search methods, implying a large trust in networks. Moreover, people tend to do the right thing when trusting their networks; in 1994, searching via friends and directly were the only methods with a positive impact. People used fewer methods in 1994 and the impact of job searching is also higher in the latter two samples. This indicates a society gradually adapting to unemployment. As regards human capital, it is worth noticing that the results in 2004 are in accordance with several predictions of human capital theory, whereas the impact of medium education and work experience in the samples based on earlier years is weaker. This suggests that more people have had time to upgrade their skills, to obtain relevant work experience and/or to obtain a post transition secondary education in 2003.Originality/valueThis paper identifies the importance of both different job‐search strategies and human capital when searching for a job in the Russian Federation. The result presented may be of interest to both policy‐makers and scientists.

Manager characteristics and real estate mutual fund returns, risk and fees

PurposeThe purpose of this paper is to analyze the effects of individual manager characteristics on real estate mutual fund (REMF) performance. Human capital theory predicts that factors like education, experience and professional certifications improve skill sets and thus performance. Conversely, capital markets theory suggests that these things may be irrelevant in the management of mutual funds.Design/methodology/approachA total of 63 REMFs were sampled over the period 2001‐2003 and equations were estimate regressing, alternatively, risk‐adjusted return, market risk and management fees on a series of fund variables and manager characteristics including the manager's tenure, whether the fund manager holds a professional certification, whether the manager has specific real estate experience, and whether the fund is team‐managed.FindingsModest evidence is found that team‐managed funds have lower risk‐adjusted returns than solo‐managed funds. Managers with longer tenure tend to pursue higher market risk levels, and there is no relation between manager characteristics and management fees.Research limitations/implicationsThis study considers only one cross‐sectional time period. Future research might use longitudinal data.Practical implicationsDespite real estate being a specialized field of finance, there is little if any support for the predictions of human capital theory that experience, education and training result in greater performance among managers of REMFs.Originality/valueThis paper extends prior work in mutual fund management characteristics and fund performance to real estate funds.

Overeducation in the Labour Market

Abstract. This paper presents a review of the literature on overeducation. The paper assesses the consistency of overeducation within the context of a number of theoretical frameworks including Human Capital Theory (HCT) and Assignment Theory. The analysis goes on to discuss the various measurement controversies associated with the study of overeducation in order to provide an assessment of the extent to which the impacts of the phenomenon represent an economic reality as opposed to a statistical artefact. After reviewing the literature, it is concluded that the impacts of overeducation are likely to be non-trivial and that the phenomenon may potentially be costly to individuals and firms, as well as the economy more generally. The existence of overeducation also raises some doubts with respect to the validity of some of the central assumptions and predictions of HCT that are unlikely to be fully explained by gaps in the standard wage equation framework.

Testing Some Predictions of Human Capital Theory: New Training Evidence from Britain

We confront the predictions of various theories with new training data from the British Household Panel Survey. We find that employer-financed training is associated with significantly higher wages at current and future firms, with a larger impact in future firms. This is consistent with human capital theory with credit constraints and with the new training literature assuming imperfectly competitive labor markets.

Marketable Human Capital Investments: An Empirical Study of Employer-Sponsored Training

This study examines the predictions of human capital theory in relation to on-the-job training. The analysis is based on a unique dataset from a consulting establishment and includes direct measures of profitability, training, and each employee's acquired human capital stock. Consistent with recent findings in the training literature, the present observations indicate that the employer is financing as well as extracting the rents from marketable human capital investments. A salary increase in connection with employer-sponsored training may function as a means of safeguarding these investments and, to a lesser extent, as a consequence of shared return.

Worth Waiting For? Delayed Compensation, Training, and Turnover in the United States and Japan

This article utilizes a rich data set on workers and their employers in the United States and Japan to test several predictions of human capital theory. The data set incorporates both prospective and retrospective measures of turnover, includes multiple measures of training, and provides a basis for calculating plant-specific returns to tenure. Contrary to human capital theory, there is no evidence that establishments with high levels of training have either high returns to tenure or low levels of turnover. Surprisingly, establishments with high returns to tenure do not have low levels of turnover.

Wage distributions and spatial preferences in competitive job search and migration.

"Aggregate interstate migration data [for the United States] indicate that the majority of observed flows are from higher to lower wage states, quite contrary to the predictions of human capital theory. It is argued that a search theoretic framework may be used to complement and strengthen human capital theory. Such a framework may then include consideration of the flows of job information and aspects of job competition. A model is proposed for application to longitudinal micro-level data which overcomes a variety of theoretical and inferential problems and which remains within the bounds of empirical application." (summary in FRE, GER)