Human capital in a global and knowledge-based economy

This document is a report prepared for the DG for Employment and Social Affairs of the European Commission. It surveys the available evidence on the contribution of investment in human capital to aggregate productivity growth and on its impact on wages and other labour outcomes at the individual level. It also draws some tentative policy conclusions for an average European country.

International Relative Prices and Civil Wars in Sub-Saharan Africa. Theory and Evidence over the period (1995-2006)

This paper presents first a theoretical model of conflict between two agents characterized by a two-sector economy. In a contested sector two agents struggle to appropriate the maximum possible fraction of a contestable output. In an uncontested sector, they hold secure property rights over the production of some goods. Agents split their resource endowment between ‘butter’, ‘guns’ and ‘ice-cream’. Eventually, tradable goods made of butter and ice-cream produced by conflicting parties are both sold to the Rest of the world. Therefore, the opportunity cost of conflict depends also on relative profitability of contested and uncontested production. In particular, productivity of uncontested production and profitability of contested sectors are countervailing forces. The empirical section focused on a panel of Sub-Saharan African countries for the period 1995-2006. Results are not fully conclusive. However, there is robust evidence that prices of manufactures (interpreted as the uncontested ice-cream) are negatively associated with the likelihood of a civil war. Eventually, international price of manufactures is also associated with a higher GDP per capita growth rate. The concluding remark seems to be that an increase in world prices of manufactures would make civil wars less likely.Theoretical model of conflict, Civil war, resource curse, butter guns and ice-cream, structure of the economy, commodity prices, MUV, panel probit analysis

Family Prestige as Old-Age Security: Evidence from Rural Senegal

This paper aims at studying the self-enforcing family contract between a migrant son and his ageing father who remained in the village and expects to receive support. In 2004, a household survey conducted in the Senegal River Valley was especially designed to account for the complex socio-political structure of the local institutions. The empirical results suggest that the social rank of the family within the village is a key to the enforcement mechanisms at work. Indeed, while belonging to a prestigious family lowers the probability of migrating, it raises the probability of frequently remitting to the patriarch. Conversely, sons from historically disadvantaged groups are more likely to both migrate and cut ties with their village of origin, including their family. Additional qualitative evidence is rather suggestive that despite their economic success, low status migrants keep being stigmatized in their village of origin. Hence, inheriting his father's dominant position in the village represents a strong incentive for a migrant son from a high-ranked family to remit. Under such circumstances, patriarchs from prestigious families only, can actually rely on their migrating sons as old-age security.Migration, Old-Age Support, Caste, Senegal River Valley

Hospital Industry Restructuring and Input Substitutability: Evidence from a Sample of Italian Hospitals

In this paper we investigate the economic rationality of the bed downsizing process characterising the hospital industry worldwide in the last decades, providing new evidence on the factor substitutability in the production of hospital services. We consider a sample of Italian regional producers and – differently from other studies – estimate a general cost function model, namely the Generalised Composite, firstly introduced by Pulley & Braunstein (1992). Alternative cost function specifications (included Translog) are estimated jointly with their associated input cost-share equations. For all models we derive Allen, Morishima and Shadow elasticities of substitution between input pairs, obtaining a fairly consistent picture across all specifications and elasticity concepts. More precisely, our results suggest a very limited degree of substitutability between factors in the production of hospital services (in particular, between beds and medical staff). These findings, consistent with previous evidence in the literature, suggest that a restructuring policy of the hospital industry which is confined to limiting the number of beds could not be a viable strategy for controlling the increase in public health care expenditure.Public health care expenditure, Hospital industry downsizing, Input substitutability

Institutions and labor market outcomes in Sub-Saharan Africa

The authors use firm-level surveydata from the manufacturing sector in 20 Sub-Saharan African countries to explore the links between labor market regulations and net job creation. A first look at firm characteristics, perceptions, and the dynamics of employment at the firm level suggests that labor regulations are not the main"binding constraint"on job creation. Other issues seem more important at this level of development. The analysis estimates the determinants of net job creation incorporating the legal origin of the country as a proxy for regulation. The findings show that, after controlling for other firm-level characteristics, legal origin is uncorrelated with net job creation in the short run.Labor Markets,Labor Policies,Microfinance,Banks&Banking Reform,Labor Management and Relations

Relations of Production and Modes of Surplus Extraction in India

This paper uses aggregate-level data, as well as case-studies, to trace out the evolution of some key structural features of the Indian economy, relating both to the agricultural and the informal industrial sector. These aggregate trends are used to infer: (a) the dominant relations of production under which the vast majority of the Indian working people labour, and (b) the predominant ways in which the surplus labour of the direct producers is appropriated by the dominant classes. This summary account is meant to inform and link up with on-going attempts at radically restructuring Indian society. JEL Categories: B24, B51relations of production, forms of surplus extraction, mode of production, India

Analysing the impact of public capital stock using the NEG wage equation: a panel data approach

This paper examines the relationship between the level of public infrastructure and the level of productivity using panel data for the Spanish provinces over the period 1984-2004, a period which is particularly relevant due to the substantial changes occurring in the Spanish economy at that time. The underlying model used for the data analysis is based on the wage equation, which is one of a handful of simultaneous equations which when satisfied correspond to the short-run equilibrium of New Economic Geography theory. This is estimated using a spatial panel model with fixed time and province effects, so that unmodelled space and time constant sources of heterogeneity are eliminated. The model assumes that productivity depends on the level of educational attainment and the public capital stock endowment of each province. The results show that although changes in productivity are positively associated with changes in public investment within the same province, there is a negative relationship between productivity changes and changes in public investment in other regions.spatial economics, public infrastructure, productivity, panel data, economic geography

The impact of land titling on labor allocation: Evidence from rural Peru

This paper analyzes the relationship between land property rights and household labor allocation. It posits that land titling has two opposite effects on labor decisions. On one hand, enhancement of tenure security should lead to reductions in guarding requirements and to increases in the hours that households spend off their land (Field effect). On the other hand, decreases in the risk of expropriation should lead to higher parcel-attached investments and to higher labor productivity related to land (productivity effect). To investigate this hypothesis, a massive land titling program in rural Peru (the Special Program of Land Titling, or PETT) is analyzed. Propensity score matching estimations suggest that the productivity effect is much larger than the Field effect, leading to overall increases in household labor allocations to agricultural self-employed activities. These estimations are robust to different specifications within a cross-section and a four-round panel dataset.Property rights, land titling, labor allocation,

Cultivating Talent through a Principal Pipeline

This report, the second in a series, describes early results of Wallace's Principal Pipeline Initiative, a multi-year effort to improve school leadership in six urban school districts. The report describes changes in the six districts' practices to recruit, train and support new principals. It also offers early lessons for other districts considering changes to their own principal pipelines