Browsing by Subject "Human capital"

This dissertation examines how knowledge is developed and deployed among employees inside one of the largest internal labor markets in the United States: the federal civil service. Each chapter lays out the theoretical background behind career- and capabilities-based processes, discusses the application to the federal employment context, and tests hypotheses derived from theoretical review, extension, and development. This dissertation uses data from two similar but distinct datasets, which come from the US Office of Personnel Management’s administrative records database. These datasets cover different periods of time (either 1974-2014 or 1989-2011), but both contain core information on civil servants and their employment.

The dissertation begins with a short introduction to organizational theory and sociological research on bureaucracies. The first chapter shows, contrary to standard economic and sociological theory, generalists in the federal civil service experience higher downstream pay than specialists. Several competing mechanisms are discussed, laying the groundwork for the next chapter. The second chapter explores the mechanism of coordinative capability as a key component of civil servants’ career success, finding that integration with the skillsets of co-workers positively predicts later salaries and levels of authority. This effect is most pronounced in larger divisions of the government, where the need to coordinate among employees with diverse capabilities is greatest. Thethird chapter moves from individual processes to organizational aggregates, demonstrating the influence of public-sector personnel capabilities on private-sector research and development (R&D). This final chapter evaluates the impact of the government’s geographically-bounded scientific capabilities on private R&D funding mechanisms and the downstream likelihood of patenting by federally-funded firms.

As a whole, this dissertation traces the historical dynamics of career progression for hundreds of thousands of individuals over multiple decades, elucidating both the career dynamics experienced by civil servants as well as the external influence of those collective dynamics as allocative processes that influence non-governmental outcomes.

This dissertation consists of three separate essays that use dynamic models to better understand the human capital accumulation process. First, I analyze the role of migration in human capital accumulation and how migration varies over the business cycle. An interesting trend in the data is that, over the period of the Great Recession, overall migration rates in the US remained close to their respective long-term trends. However, migration evolved differently by employment status: unemployed workers were more likely to migrate during the recession and employed workers less likely. To isolate mechanisms explaining this divergence, I estimate a dynamic, non-stationary search model of migration using a national longitudinal survey from 2004-2013. I focus on the role of employment frictions on migration decisions in addition to other explanations in the literature. My results show that a divergence in job offer and job destruction rates caused differing migration incentives by employment status. I also find that migration rates were muted because of the national scope of the Great Recession. Model simulations show that spatial unemployment insurance in the form of a moving subsidy can help workers move to more favorable markets.

In the second essay, my coauthors and I explore the role of information frictions in the acquisition of human capital. Specifically, we investigate the determinants of college attrition in a setting where individuals have imperfect information about their schooling ability and labor market productivity. We estimate a dynamic structural model of schooling and work decisions, where high school graduates choose a bundle of education and work combinations. We take into account the heterogeneity in schooling investments by distinguishing between two- and four-year colleges and graduate school, as well as science and non-science majors for four-year colleges. Individuals may also choose whether to work full-time, part-time, or not at all. A key feature of our approach is to account for correlated learning through college grades and wages, thus implying that individuals may leave or re-enter college as a result of the arrival of new information on their ability and/or productivity. We use our results to quantify the importance of informational frictions in explaining the observed school-to-work transitions and to examine sorting patterns.

In the third essay, my coauthors and I investigate the evolution over the last two decades in the wage returns to schooling and early work experience.

Using data from the 1979 and 1997 panels of the National Longitudinal Survey of Youth, we isolate changes in skill prices from changes in composition by estimating a dynamic model of schooling and work decisions. Importantly, this allows us to account for the endogenous nature of the changes in educational and accumulated work experience over this time period. We find an increase over this period in the returns to working in high school, but a decrease in the returns to working while in college. We also find an increase in the incidence of working in college, but that any detrimental impact of in-college work experience is offset by changes in other observable characteristics. Overall, our decomposition of the evolution in skill premia suggests that both price and composition effects play an important role. The role of unobserved ability is also important.

My dissertation examines human capital investments and their role in individual's labor market outcomes. Chapter 2 analyzes how public school teachers decide to make human capital investments and the effects that these decisions have on their future labor market outcomes. In particular, I look at the decisions of employed teachers to obtain an advanced degree. Teachers' education and career decisions are modeled via a dynamic framework in the presence of teacher-specific unobserved heterogeneity. I find that teachers' decisions to obtain master's degrees are motivated by more than just an increase in salary. In particular, I observe teachers with master's degrees receiving a better draw on job characteristics, as measured by school quality, and that teachers are willing to pay between $1,500 and $20,000 to to move up one quartile in school quality. I also find that teachers value having broad access to online degree programs more than they dislike tuition costs. Counterfactual simulations by unobserved ability are consistent with a story that high-type teachers value both the salary increase and a better draw in career prospects, whereas low-type teachers are mostly interested in the salary increase.

Chapter 3 investigates the evolution over the last two decades in the wage returns to schooling and early work experience. Using data from the 1979 and 1997 panels of the National Longitudinal Survey of Youth, we isolate changes in skill prices from changes in composition by estimating a dynamic model of schooling and work decisions. Importantly, this allows us to account for the endogenous nature of the changes in educational and accumulated work experience over this time period. We find an increase over this period in the returns to working in high school, but a decrease in the returns to working while in college. We also find an increase in the incidence of working in college, but that any detrimental impact of in-college work experience is offset by changes in other observable characteristics. Overall, our decomposition of the evolution in skill premia suggests that both price and composition effects play an important role. The role of unobserved ability is also important.

I study the effect of human capital on firms' leverage decisions in a structural dynamic model. Firms produce using physical capital and labor. They pay a cost per employee they hire, thus investing in human capital. In default a portion of this human capital investment is lost. The loss of human capital constitutes a significant cost of financial distress. Labor intensive firms are more heavily exposed to this cost and respond by using less leverage. Thus the model predicts a decreasing relationship between leverage and labor intensity. Consistent with this prediction, I show in the data that high labor intensity leads to significantly less use of debt. In the model a move from the lowest to the highest decile of labor intensity is accompanied by a drop in leverage of 21 percentage points, very close to the 27 percentage point drop in the data. Overall, I argue that human capital has an important effect on firm leverage and should receive more attention from capital structure researchers.

Furthermore, I study a two-period contracting problem in which entrepreneurs need financing but have limited commitment. If an entrepreneur chooses to default, he can divert a proportion of the project's output. Entrepreneurs are heterogeneous with respect to their ability to divert output. In particular, I focus on the special case with only two types of entrepreneurs. "Opportunistic'' entrepreneurs can divert output, but "dependable'' entrepreneurs cannot. I find that, if the proportion of dependable entrepreneurs is sufficiently high, it is optimal to write contracts that induce second period default by the opportunistic entrepreneurs. This critical proportion generally decreases with the severity of the agency problem. The model delivers both cross-sectional and time-series predictions about default, investment, and output.

This dissertation presents three essays on topics in development economics. Drawing on rich longitudinal data as well as measures of cognitive skills adapted from cognitive neuroscience, the chapters focus on health and human capital through the life course. The first essay isolates the causal impact of public health insurance on child health, measured by height-for-age, by exploiting the roll-out of Seguro Popular, a large-scale program that provides public health insurance to about half of Mexico’s population. Drawing on insights from the biology of human linear growth and using population-representative longitudinal data, we establish that Seguro Popular has had a modest impact on child nutritional status. These effects were larger after the program had been established for several years, suggesting that supply-side factors may have been critical impediments. The second essay turns to the relationship between executive function and labor market outcomes. This project describes how a widely used measure of executive function with foundations in cognitive neuroscience was implemented as part of a large-scale, population-representative survey in Indonesia. I find that higher cognitive functioning is associated with rewards in the labor market, particularly for women, and that executive function is related to labor force participation and the choice between wage work and self-employment. Motivated by the importance of executive function and human capital in later life, the third essay turns to the relationship between parental executive functioning and child outcomes. I find that parental executive function is strongly related to child executive function, and that better parental executive function is associated with better child nutritional outcomes, as measured by height-for-age and weight-for-height. The relationship between parents’ executive functioning and child outcomes depends both on the gender of the child and whether the child is first born or has older siblings. These results suggest that the relationships I observe between parental executive functioning and child development are not simply genetic but reflect parental choices and behaviors. Together, these chapters demonstrate the importance of bringing the tools from cognitive neuroscience to economics to further examine the role that specific cognitive skills like executive function play for success and well-being. They also highlight the critical importance of the early childhood household and environment for development, with long-lasting consequences for later life.

I examine how employing workers with specific human capital affects capital structure decisions by employers. Based on plant-level data from the U.S. Census Bureau, I use the opening of new plants as an exogenous reduction in human capital specificity-- the inability to transfer specific skill sets across employers--for incumbent workers in a local labor market. My results indicate that the opening of a new manufacturing plant in a given county leads to a 2.6-3.9% increase in the leverage of existing manufacturing firms in the county, relative to the leverage of manufacturing firms in an otherwise comparable county. Moreover, plant openings have a larger impact on firms that are more likely to share labor with the new plant, that have high labor intensity, and that have high marginal tax benefits of debt. Alternative explanations concerning productivity spillovers, product market competition, and county-wide shocks do not appear to account for the results. I find consistent evidence in a separate sample that contains a broad panel of firms. Overall, these results suggest that human capital specificity raises the cost of debt and thus decreases optimal leverage.

The United States experienced a tremendous expansion of higher education after the Second World War. However, this expansion has not led to a substantial reduction to class inequalities at elite universities, where the admissions process is growing even more selective. In his classic studies of French education and society, Pierre Bourdieu explains how schools can contribute to the maintenance and reproduction of class inequalities. Bourdieu's concepts have stimulated much research in American sociology. However, quantitative applications have underappreciated important concepts and aspects of Bourdieu's theory and have generally ignored college life and achievement. With detailed survey and institutional data of students at elite, private universities, this dissertation addresses a gap in the literature with an underexplored theoretical approach.

First, I examine the class structure of elite universities. I argue that latent clustering analysis improves on Bourdieu's statistical approach, as well as locates class fractions that conventional schemas fail to appreciate. Nearly half of students have dominant class origins, including three fractions - professionals, executives and precarious professionals - that are distinguishable by the volume and composition of cultural and economic capital. Working class students remain severely underrepresented at elite, private universities. Second, I explore two types of social capital on an elite university campus. In its practical or immediate state, social capital exists as the resources embedded in networks. I explore the effects of extensive campus networks, and find that investments in social capital facilitate college achievement and pathways to professional careers. As an example of institutionalized social capital, legacies benefit from an admissions preference for applicants with family alumni ties. Legacies show a distinct profile of high levels of economic and cultural capital, but lower than expected achievement. Legacies activate their social capital across the college years, from college admissions to the prevalent use of personal contacts for plans after graduation.

Third, I examine how social class affects achievement and campus life across the college years, and the extent to which cultural capital mediates the link between class and academic outcomes. From first semester grades to graduation honors, professional and middle class students have higher levels of achievement in comparison to executive or subordinate class students. The enduring executive-professional gap suggests contrasting academic orientations for two dominant class fractions, while the underperformance of subordinate class students is due to differences in financial support, a human capital deficit early in college, and unequal access to "collegiate" cultural capital. Collegiate capital includes the implicit knowledge that facilitates academic success and encourages a satisfying college experience. Subordinate class students are less likely to participate in many popular aspects of elite campus life, including fraternity or sorority membership, study abroad, and drinking alcohol. Additionally, two common activities among postsecondary students - participating in social and recreational activities and changing a major field early in college - are uniquely troublesome for subordinate class students. Overall, I conclude that Bourdieu provides a unique and useful perspective for understanding educational inequalities at elite universities in the United States.

This dissertation combines three essays that explore how pregnant women’s exposure to social and physical stressors affect human capital at it earliest stage, in utero. Informed by theoretical groundwork adopted from medical and epidemiological literature and applying quasi experimental methods to population-representative data, this work rigorously examines the impact of risk factors for which policy in the form of regulation is the main institutional instrument on newborns’ health and survival. I begin with a chapter that evaluates the introduction of alcohol-related policies in a large metropolitan area in Brazil. The staggered adoption over the area permits identifying the positive causal effects of these policies on fetal survival. The second chapter quantifies the adverse effect of air pollution on newborns’ health using the meteorological phenomenon of thermal inversion formation to disentangle the impact of pollution from the role of economic conditions. The third chapter investigates the consequences of immigration enforcement in the U.S. on the birth outcomes of in utero children for likely unauthorized families.