Skill Endowments Research Articles

The impact of behavioral attributes on rural youth’s propensity to participate in non-primary agribusinesses: Evidence from KwaZulu-Natal, South Africa

ABSTRACT Youth participation in agriculture in general and agribusinesses in particular remains limited in Africa and empirical insight on the enablers and inhibitors is limited. This paper aims to investigate the impact of behavioral attributes (such as entrepreneurial spirit and business skills endowment) on the potential participation of rural youth in non-primary agribusinesses. Principal Component Analysis and Fractional Logit Model were employed on a data set of 152 rural youth. The results show that most rural youth are endowed with entrepreneurial spirit and relatively well capacitated with business skills. The results further show that rural youth endowed with entrepreneurial spirit are less likely to engage in non-primary agribusinesses. Other factors that influence rural youth potential participation included psychological capital, agricultural perceptions, and demographics. The results suggest that interventional programs should consider behavioral attributes when aiming to attract rural youth into the sector.

Quota removal, destination-specific export shocks, and skill acquisition in China

This paper uses the exposure of 16-year-old cohorts to an exogenous elimination of export quotas to explore the short-run schooling consequence of destination-specific export expansions and the longer-run effects on adult outcomes. We find that export expansions to rich-country markets resulted in substantially higher high school enrollment rates. The expansions disproportionately favored urban children and children in regions with lower initial skill endowment. Subsequently, the effects translate into the achievement of high school attainment but not the achievement of college and above education. More than a decade later, the affected cohorts exhibit significant differences in employment and fertility outcomes, highlighting the persistent effects of the shocks. Finally, we provide evidence that human capital effects work through an increased educational investment of households, driven by a mechanism involving parental wage growth and education premium in local labor markets.

Job creation and destruction in the digital age: Assessing heterogeneous effects across European Union countries

Do investments in Information and Communication Technology (ICT) create jobs? The literature suggests that, even if innovations are labour saving, there may be compensating mechanisms that lead to a positive employment effect. We investigate this issue using country-level data for the European Union from 1995 to 2019. The results suggest an average positive net effect of ICT investment on total employment. An increase of €100,000 in the ICT investment stock is associated with an average increase of 3.3 jobs in the European Union. However, the magnitude of the impact is heterogeneous across countries. The differences are explained by the country-specific characteristics of ICT investment (non-machine versus machine-based) and the existing skill endowment of the labour force. Moreover, the rate of return on investment expressed in terms of net job creation tends to decline over time, as the share of high-skilled workers in the market increases.

The creation of digital innovative start-ups: the role of digital knowledge spillovers and digital skill endowment

Building on the Knowledge Spillover Theory of Entrepreneurship (KSTE) and the Digital Entrepreneurial Ecosystem (DEE) approach, this paper investigates the relationship between the local availability of digital knowledge (i.e., digital knowledge spillovers and digital skill endowment) and the creation of digital innovative start-ups in Italian NUTS3 regions. The obtained results show that both elements are significant for the creation of digital innovative start-ups at the province level, and a two-fold contribution has been made: from a theory perspective, an extension of KSTE to digital settings has been used to assess the relevance of geographical issues, while, from a DEE perspective, the study contributes by empirically analyzing the specific characteristics of the local ecosystem that can affect the creation of digital innovative start-ups. Finally, we discuss the implications for entrepreneurship and technology policy at the local level.

Gender Wage Gap among Rural Non-farm Sector Employees in India: Evidence from Nationally Representative Survey

This article examines the gender-wise work participation rate and evaluates the wage disparity between male and female workers employed as either regular or casual employees in rural non-farm sectors. Based on the National Sample Survey data of 2004–2005 and 2019–2020, it is found that the gender inequality (against women) in employment opportunity is not only prevalent in the rural non-farm labour market but also on the rise during the last one and a half decades. The perceived difference in human capabilities between women and men and the non-availability of enough job opportunities could be a major driver of this inequality, apart from the existing social stigma in hiring the women in the rural labour market. This is reflected by the rise in the mean wage difference between two genders during 2004–2005 and 2019–2020. Both the mean and the quantile decomposition results suggest that a higher percentage of gender wage differentials is due to endowment components or labour productivity differences. Because of the existence of the ‘sticky floor’ phenomenon, the wage disparity is relatively larger at the bottom end of the earning distribution. But it reduces when we stride towards higher quintiles on the wage distribution. Hence, it is argued that policies aimed at enhancing the skill endowment of rural women can substantially reduce both the non-farm sector gender wage gap and the inequality in access to non-farm employment.

Global Innovation Contests

The primary objective of this paper is to develop a two-country, dynamic, general equilibrium model with innovation contests to formally analyze the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D, while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.

Effects of technological change and automation on industry structure and (wage-)inequality: insights from a dynamic task-based model

The advent of artificial intelligence is changing the task allocation of workers and machines in firms’ production processes with potentially wide ranging effects on workers and firms. We develop an agent-based simulation framework to investigate the consequences of different types of automation for industry output, the wage distribution, the labor share, and industry dynamics. It is shown how the competitiveness of markets, in particular barriers to entry, changes the effects that automation has on various outcome variables, and to which extent heterogeneous workers with distinct general skill endowments and heterogeneous firms featuring distinct wage offer rules affect the channels via which automation changes market outcomes.

Skill Endowment Through Vocational Education and Training Programmes and Early Career Mobility

This article addresses inequalities in short‐ and medium‐term career outcomes of workers with different vocational education and training (VET) programmes during the early career. In particular, we examine how the degree of vocational specificity of VET programmes affects occupational status mobility throughout individuals’ early careers, a topic that has hitherto received little attention. We adopt a life course perspective and combine an individual‐level theoretical approach (human capital and signalling theory) with an institutional approach. The former focuses on individuals’ skill acquisition during VET and across the early career. The latter emphasises that individuals’ allocation to a training programme influences the amount and types of skills they acquire. The multinomial logistic regression analyses are based on a combination of detailed curricula‐based occupation‐level data on the specificity of training programmes and individual‐level data from the Transitions From Education to Employment (TREE) longitudinal dataset. The results show, firstly, that labour market allocation at the beginning of a career has consequences for later labour market outcomes. Second, practical occupation‐specific education and training facilitate status stability at labour market entry, while general skills and knowledge are decisive for long‐term upward mobility.

Melting pot or salad bowl: Cultural effects on industrial similarity during trade liberalization

This paper examines the impact of culture on the industrial similarity between two adjacent counties during the process of trade liberalization between 1998 and 2007. The findings show that trade accelerates the industrial similarities between counties. The evolution of similarity is unequal between regions and over time, as industries in neighboring counties that belong to different dialect regions become more similar than industries within the same dialect region. The rise in industrial similarity is being fueled by the emergence of high-skill-intensive businesses as a result of trade-related technology spillovers. Adjacent counties of different dialects have greater skill endowments, which facilitate information transfer.

Resilience, Skill Endowment, and Diversity: Evidence from US Metropolitan Areas

This article investigates the role of technological, industrial, and human capital composition in shaping short-term regional resilience in the wake of the Great Recession of 2008. Using data on 295 US Metropolitan Statistical Areas over the period 2008–14, we find that the most resilient regions feature a very diversified industrial structure. At the same time, an excess of technological diversity thwarts the ability to absorb external shocks. Lastly, a high endowment of high-level abstract skills is positively correlated with regional resilience, though the moderating effect of technological diversity is negative.

The socioeconomic gradient in child health and noncognitive skills: Evidence from the Czech Republic

We investigate the presence of a socioeconomic status (SES) gradient in children’s health and noncognitive skill development, and its evolution with child age using cohort data from the Czech Republic. We show that family SES are positively associated with better child health. These effects start to emerge at age 3 and are persistent for all subsequent ages. We find a modest strengthening of the gradient as the children grow older. Similarly, at the lowest distribution of average family income, children lag in their noncognitive skills. We find evidence that children enter school with substantial differences in noncognitive skill endowments based on family SES. This correlation persists when controlling for poor health at birth, the roles of specific and chronic health problems, housing conditions, and partner characteristics. Maternal health status explains some of the association between family income and child noncognitive skills. We account for the endogeniety of SES and non-linearities in measures.

Skill endowment, routinisation and digital technologies: evidence from U.S. Metropolitan Areas

ABSTRACT Scholars and policy makers frame the debate on labour market polarisation by emphasising the role of key drivers such as international trade and of technological change. The present paper explores these themes from a different perspective and inquires whether de-routinisation has harmed local innovation capacity. Our empirical study builds on the literature on learning-by-doing and incremental innovation and focuses on advanced manufacturing technologies (AMTs) in US Metropolitan Statistical Areas over the period 1990–2012. Results provide support to the hypothesis that de-routinisation is associated with a generalised decline of local innovation performance, particularly in AMTs.

Differential Education Subsidy Policy and Wage Inequality Between Skilled, Semi-skilled and Unskilled Labour: A General Equilibrium Approach

The article investigates the effects of secondary (including vocational) and higher-education subsidies on wage inequalities between skilled, semi-skilled and unskilled workers, and unemployment in a small open developing economy in terms of a two-sector Harris–Todaro dynamic general equilibrium framework. The results show that skilled–unskilled and skilled–semi-skilled wage inequalities depend on factor intensity conditions, while semi-skilled–unskilled wage inequality is determined by the level of skill formation in the economy. There is a trade-off between the wage inequalities of skilled–semi-skilled and semi-skilled–unskilled workers due to secondary education subsidy; the trade-off also exists with respect to higher-education subsidy if the manufacturing sector is more skilled labour intensive. However, if the manufacturing sector is capital intensive, higher-education subsidy is detrimental for both types of wage inequalities in the initial years of skill formation but might have favourable effects when the skill endowment is high. Both types of subsidies reduce unemployment in the initial periods, but higher-education subsidy accentuates it when skilled labour supply expands in the economy.

Demo-economic Modeling: Review and Prospects

This paper focuses on progress in achieving greater integration between demographic and economic components in system-wide modeling. It underlines the importance of Czamanski’s Baltimore model as well as other influential research based on the two-sector economic base model, before proceeding to review more complex, spatially-disaggregated economy-wide models. The subsequent work of Ledent, Schinnar and others is presented as the foundation for some important initiatives that centered on the Batey-Madden model and its derivatives. Attention is directed to some recent advances in the Batey-Madden model and subsequent work addressing household heterogeneity in the context of income formation and distribution associated with contributions by Miyazawa. The paper explores some avenues for integration of activity analysis and household disaggregation based on income, age or skill endowments to enhance the understanding of the role that households play in the economy.

Health Endowments, Schooling Allocation in the Family, and Longevity: Evidence from US Twins

We analyze data from the Minnesota Twin Registry (MTR), combined with the Socioeconomic Survey of Twins (SST), and new mortality data, and contribute to two bodies of literature. First, we demonstrate a beneficial casual effect of education on health and longevity in contrast to other twin-based studies of the US population, which show little or no effect of education on health. Second, we present evidence that parents compensate for differences in their children’s health endowments through education, but find no evidence that parents reinforce differences in skill endowments. We argue that there is a bias towards detecting reinforcement both in this paper and in the literature. Our compensation result for health endowment holds, as it is obtained despite the bias. We account for observed and unobserved confounding factors, sample selection bias, and measurement error in education.

Employment and Earning Differentials Among Vocationally Trained Youth: Evidence from field studies in Punjab and Haryana in India

This article examines the employability of vocationally trained youth and estimates their earning functions and existing wage differentials by gender and social groups in both Punjab and Haryana. Using primary data from two selected districts (one from each state) with a sample size of 914 pass-outs from 19 training institutes, we find that lack of demand and skill issues restrict vocationally trained youth to obtain quality jobs in these districts. Hence, most of them are either found in contractual jobs with a lower level of earning or remain unemployed from the time of completion of their training. Moreover, significant earning/wage differences are noted across gender and social groups. Female and Scheduled Caste (SC) workers are discriminated by getting paid lesser than their male and upper caste counterparts, despite their similar training and skill endowments. Hence, it is suggested that government intervention is necessary to lower the existing skill gap and to improve the quality of jobs for vocationally trained youth to reduce the rising unemployment problem.

Skill Specificity of Upper-Secondary Training Occupations and the Gender Pay Gap

Gender disparities in wages are still fairly large. On average, women earn less than men from the beginning of their careers. This article investigates whether young men and women with vocational education and training receive different returns for occupation-specific and general skills, a topic that has hitherto received little attention. Theoretically, we draw on a culturalist approach, as well as on the varieties of capitalism approach. The analyses are based on a combination of detailed occupation-level data on the specificity of training occupations and individual-level data from the Swiss Labour Force Survey on the incomes of upper-secondary vocational diploma holders. The results of multilevel regression models show that men’s and women’s incomes are affected by a complex interplay between gender and skill endowment. Occupation-specific vocational skills only secure a high income early in the careers of men who trained in male-typed or gender-neutral occupations. Women profit from a high proportion of general knowledge in their training. Furthermore, we find evidence for a general devaluation of female-typed skills. In sum, the findings suggest that employers’ discriminatory remuneration practices, a general devaluation of female-typed skills and young people’s rational skill investment decisions contribute jointly to the gender gap in income.

Assessing perceived job quality among seasonal tourism workers: The case of Rimini, Italy

This article aims at discussing the perceived job quality especially among seasonal workers in the tourism industry through the analysis of a sample of 407 seasonal workers hired in the summer of 2013 in the Province of Rimini, one of the most popular sun, sand and sea tourism destinations in Europe. The identification/construction of a job quality index is the most original contribution of this article as it integrates the subjective components with a selection of objective items related to skills endowment and training opportunities and with a set of job holders’ characteristics, qualifications and occupations. The impact of each component is then evaluated and discussed in the article by means of several statistical and econometric techniques including analysis of variance and cluster analyses as well as ordinary least squares regressions. Results show that the perception of seasonal work seems thus to be more multifaceted than usually assumed. Although it is intrinsically precarious and characterized by objectively bad jobs under many aspects, such as stability, career opportunities and skill requirements, workers’ perception of job quality is mixed, being positively influenced by the assignment to part-time and front-line positions. Such evidence provides relevant insights to design better jobs in the tourism industry and improve its long-term sustainability in contexts characterized by high seasonality.

Who will win the electric vehicle race? The role of place-based assets and policy

Regional economies are shaped by their economic histories and existing endowments. This paper explores the question: how do a region’s economic history and institutional endowments affect its success and trajectory in an emerging industry? Our case, electric vehicle development and production, is an industry which combines more traditional skilled manufacturing with knowledge-driven innovation activities. We present deep qualitative case studies of two regions, focusing on one firm in each. The case of Tesla in the San Francisco Bay Area examines an electric vehicle firm in a region with a strong tech innovation system, while the case of Maserati in Emilia-Romagna, Italy, examines a firm that builds on a regional history of automotive manufacturing. Across cases, we compare regional skill endowments, institutional coordination, and place-based policymaking. We conclude that, as an emerging industry under a new economic paradigm, electric vehicle manufacturing by Tesla and Maserati represents two different conceptions of the industry and consequently two different location strategies. Yet these two strategies remain rooted in regional contexts, owing both their success to successful exploitations of these, and their struggles to their failure to compensate for regional gaps. This presents a clear opportunity for place-based industrial strategy to evolve and intervene.

Labour Market Outcomes and Skill Endowment of Nepali Migrant Workers in India: Case of Uttar Pradesh and Delhi

Migration to India of Nepali workers is a historical phenomenon. Due to 'open border' and multidimensional inter-linkages, migration for work persists to this day. The importance and challenges of the labour market for Nepali migrants in India are yet to be recognized and studied. This study examines the existing skill endowments of Nepali migrant workers and strategies to enhance their labour market outcomes in India. The Indian labour market is fragile. Recruitment neither follows a strict rule or process nor are any specific skills required. From this standpoint, the situation of Nepali migrant workers is not much different than India’s internal migrants. However, Nepali migrants are neither well documented nor properly recruited in the labour markets of India. Because of their low level of education and lack of skill, they are deprived of good job opportunities and their income is also low. Most of the Nepali migrants are not netted in by the social security scheme of India. This study suggests that education; training for skills and social security benefits can go a long way in improving the labour market outcomes of the Nepali migrants.