Optimal investment with vintage capital: Equilibrium distributions

The paper concerns the study of equilibrium points, or steady states, of economic systems arising in modeling optimal investment with vintage capital, namely, systems where all key variables (capitals, investments, prices) are indexed not only by time but also by age. Capital accumulation is hence described as a partial differential equation (briefly, PDE), and equilibrium points are in fact equilibrium distributions in the variable of ages. A general method is developed to compute and study equilibrium points of a wide range of infinite dimensional, infinite horizon, optimal control problems. We apply the method to optimal investment with vintage capital, for a variety of data, deriving existence and uniqueness of equilibrium distribution, as well as analytic formulas for optimal controls and trajectories in the long run. The examples suggest that the same method can be applied to other economic problems displaying heterogeneity. This shows how effective the theoretical machinery of optimal control in infinite dimension is in computing explicitly equilibrium distributions. To this extent, the results of this work constitute a first crucial step towards a thorough understanding of the behavior of optimal paths in the long run.     

Real options and human capital investment

This paper extends the standard human capital model with real options. Real options influence investment behavior when risky investments in human capital are irreversible and individuals can affect the timing of the investment. Option values make individuals more reluctant to invest in human capital and, as a result, required returns on the investment increase. Real options may help to explain a larger human capital premium for higher education, smaller responsiveness of higher educational investments to financial incentives, and larger sensitivity of higher educational investments to low-return outcomes and human capital risks. Higher tax rates (or lower subsidies) depress human capital investments, but to a lesser extent than in the standard human capital model if not all direct costs are tax-deductible. A flat income tax remains neutral if education expenditures are fully deductible.     

On-the-job human capital investment and intertemporal substitution: New evidence on intertemporal substitution elasticity

This paper argues that estimates of intertemporal elasticity of substitution (IES) obtained from standard life-cycle models are subject to a downward bias because they neglect the life-cycle and demographic patterns of on-the-job human capital investment. Taking into account the fact that part of a worker's time at work goes to acquiring human capital in addition to his main task of producing goods, we extend the standard life-cycle model to include time spent on investing in on-the-job human capital and propose a new framework for identifying the IES. We obtain statistically significant evidence that conventional estimates of IES for total hours at work are biased downward about 20% at the intensive margin. The corresponding IES estimates for production hours are biased downward even more, which provides an explanation for why output fluctuation is greater than hours/employment fluctuation over the business cycle.     

Trust or bust: Growth effects of knowledge,human and social capital revisited

Social capital consists of trust, collective values, and shared norms. It helps society to work efficiently and, hence, promotes knowledge accumulation and growth. This paper identifies the contribution of social capital to differences in total factor productivity among European subnational regions, but, unlike other studies, it focuses on the effects of interregional differences in social capital. To do so, the paper employs a spatial Durbin model of a social-capital extended Cobb-Douglas production function. Our results suggest that transfers of knowledge might be secondary to the presence of collectivism and human capital in knowledge-generating regions. Although knowledge can cross boundaries, an absence of skills and trust limits local growth capacity. Our estimations also suggest the presence of gravity effects emanating from social and human capital in which some regions lose against others nearby that have more abundant social and human capital.     

The risk-return trade-off in human capital investment

In this paper, we analyze investments in human capital in a way which is standard for financial assets, but not (yet) for human capital assets. We study mean-variance plots of human capital assets. We compare the properties of human capital returns using a performance measure and by using tests for mean-variance spanning. Fields differ strongly not only in common rates of return, but also in return per unit of risk. We identify a range of educations that are efficient in terms of investment goods, and a range of educations that may be chosen for consumption purposes.     

Human capital and the internationalisation of venture capital firms

We examine the neglected area of internationalisation by VCs. Using a representative sample of 195 VCs, we show that the decision of a European VC firm to invest internationally is driven by its human resources. Having more VC executives in general and more VC executives with previous international experience in specific, results in a higher probability of investing internationally. In contrast, more VC executives with experience in the VC industry or with an engineering background lead to a higher probability of remaining domestic.     

Integrating strategic human capital and strategic human resource management

Abstract

Human capital is an important construct in a variety of fields spanning from micro scholarship in psychology to macro scholarship in economics. Within the various disciplinary perspectives, research focuses on slightly different aspects and levels of human capital within organizations, which may give opportunities for integration. The current paper aims to increase knowledge about human capital within organizations by integrating two streams of research which focus directly on human capital, but have approached human capital in different ways: strategic human capital (SHC), and strategic HRM. We describe both SHC and strategic HRM research streams and propose areas of integration, and directions for future research on human capital in organizations.     

Contingent capital,capital structure and investment

We examine the interaction between investment and financing policies in a dynamic model for a firm with existing assets-in-place and a growth option, of which investment cost is financed with equity and contingent convertible bonds (CoCos). We attempt to clarify how CoCos impact on investment timing, capital structure and inefficiencies arising from debt overhang and asset substitution. We show that there is a conversion ratio (the fraction of equity allocated to CoCo holders upon conversion) to eliminate the inefficiencies. Our conclusions predict that debt leverage decreases with investment option payoff factor and the average appreciation rate of the cash flow. In contrast to traditional corporate finance theory saying that a firm's value decreases globally with business risk, our model indicates that it might first decrease and then increase with asset volatility.     

Unveiling the endogeneity between social-welfare and labor efficiency: Two-stage NDEA neural network approach

This paper estimates intersectoral labor efficiencies and its covariances in Brazil from 2003 to 2016 using a two-stage neural network model. It investigates whether there is a positive relationship between education and productivity. At the first stage, a static Markov chain regression provides labor quantitative efficiency (volume) and labor value efficiency (value added). The second stage runs a dynamic regression model between each estimated efficiency and the social contextual variables to unveil endogeneities from covariances among the variables set. Strong covariances are found between the efficiencies and fertility rate, suggesting that there is a relevant gap between the productive sector and worker qualification, leading to lower levels of efficiency in Brazil, as shown in the theoretical model. The economy is unable to allocate efficiently the stock of qualified workers.     

Institutional quality and human capital development in Africa

This study investigates the role of institutional quality in human capital development using a panel of 49 African countries over the period 1996–2018. The study employs a dynamic model based on a two-step system generalized method of moments. The results show that improving institutional quality promotes access to primary, secondary, and tertiary education overall and for females. In particular, government effectiveness, control of corruption and political stability, and the absence of violence, including terrorism, are the most important dimensions that foster human capital development. The results suggest that fostering these particular institutional quality dimensions is critical to improving human capital development in Africa.     

The role of human capital after the crisis in Italy: A regional analysis

In the years of the prolonged post-crisis recession, the well-known North-South divide in Italy has significantly worsened. Several structural weaknesses limit both post-crisis recovery and socioeconomic convergence. A greater understanding of the economic contribution of workers' human capital, which is not fully exploited in Italy, could address the two issues. We analyze the effects of human capital on local economic performance and productivity, along with other socioeconomic variables, controlling for the endogeneity problem. Workers with a better education can promote economic recovery through productivity enhancement in the South, while traditional aspects related to industrialization are significant in the “wealthy North”. However, structural aspects, such as the local financial systems, must be developed to start a path to convergence for the North and the South.     

The effects of internal locus of control on entrepreneurship: the mediating mechanisms of social capital and human capital

This paper proposes the research framework that locus of control enhances entrepreneurship through the mediating mechanisms of increased social capital in interpersonal networks and improved human capital in personal development. We adopted structural equation modeling to examine the research hypothesis. The research participants comprised managers from 14 enterprises in China; a total of 1002 valid questionnaires were collected. The results revealed that social and human capital mediate the effect that internal locus of control exerts on entrepreneurship. This study provides the following research contributions: first, the findings address the gaps in previous studies regarding the effect that a single dimension (i.e. personality traits) produces on entrepreneurship. Second, by employing the social exchange and human capital theories, we integrated interpersonal and individual perspectives into the research framework to explore factors affecting entrepreneurship, identifying that social and human capital are key-mediating mechanisms through which locus of control influences entrepreneurship.     

Misallocation,informality, and human capital: Understanding the role of institutions

The aim of this paper is to quantify the role of formal-sector institutions in shaping the demand for human capital and the level of informality. We propose a firm dynamics model where firms face capital market imperfections and costs of operating in the formal sector. Formal firms have a larger set of production opportunities and the ability to employ skilled workers, but informal firms can avoid the costs of formalization. These firm-level distortions give rise to endogenous formal and informal sectors and, more importantly, affect the demand for skilled workers. The model predicts that countries with a low degree of debt enforcement and high costs of formalization are characterized by relatively lower stocks of skilled workers, larger informal sectors, low allocative efficiency, and measured TFP. Moreover, we find that the interaction between entry costs and financial frictions (as opposed to the sum of their individual effects) is the main driver of these differences. This complementarity effect derives from the introduction of skilled workers, which prevents firms from substituting labor for capital and in turn moves them closer to the financial constraint.     

创业投资公司的后续管理模式设计

文章认为创业投资的后续管理是创业投资机构或专家减少投资风险,确保预期的投资收益率的重要手段。文章以某创业投资公司设计的积极干预型后续管理模式为例,探讨该管理模式把增值服务揉合在监控过程之中,使其能有效地介入创业企业的管理,并进一步突破信息不对称的束缚、减少各种代理风险。     

The business cycle human capital accumulation nexus and its effect on hours worked volatility

This paper studies hours worked volatility and the cyclicality of human capital investments by embedding a Ben-Porath life-cycle model of human capital accumulation into an RBC setting. Agents differ across two dimensions: age and productivity in learning. Our results show that individuals invest more in human capital during economic downturns. However, human capital accumulation is more counter-cyclical for young and low-productivity individuals because they face a lower opportunity cost of education and a higher marginal product of human capital. These results are confirmed empirically using US data from the Current Population Survey and the American Time Use Survey. In addition, the paper contributes to the RBC literature by showing that the model׳s business cycle properties, in particular hours worked volatility, are sensitive to assumptions of heterogeneity. Introducing heterogeneity in productivity increases the volatility of aggregate hours worked and changes the life-cycle profile for hours volatility to better match the data.     

Bank capital regulation,loan contracts,and corporate investment

This paper studies the link between bank capital regulation, bank loan contracts and the allocation of corporate resources across firms’ different business lines. Credit risk is lower when firms write contracts that oblige them to invest mainly into projects with highly tangible assets. We argue that firms have an incentive to choose a contract with overly safe and thus inefficient investments when intermediation costs are increasing in banks’ capital-to-asset ratio. Imposing minimum capital adequacy for banks can eliminate this incentive by putting a lower bound on financing costs.     

The effect of human capital on occupational health and safety investment: An empirical analysis of Spanish firms

This paper analyses how firms' human capital influences their investments in occupational health and safety (OHS). We argue that the incentive to protect workers by investing in OHS is a function of the stock of human capital. The empirical analysis was based on data from the official Working Conditions Spanish Survey on OHS management. Our sample was restricted to 1,472 firms from the manufacturing and construction industries. Our results show that firms that place more emphasis on training and have a multiskilled and innovative workforce invest more in OHS. However, having technological and design skills has no impact on the investment in OHS, presumably because these skills are widely available in the labour market. Finally, the analysis suggests that some abilities such as problem solving may be affected by informational asymmetries and therefore firms may suboptimally invest in protecting these capabilities.     

The emergence of human capital: Roles of social capital and coordination that drive unit performance

Empirical work on human capital has tended to focus on the direct effects of human capital on performance, whereas little attention has been paid to behaviours through which human capital influences performance. This study uses the “human capital emergence” model to examine relationships among human capital, social capital, coordination, and performance over a 2‐year period of time. Findings indicate that human capital, social capital, and coordination each influence performance. Human capital and social capital also positively predict coordination. Lastly, coordination mediates the relationships between human capital and performance and social capital and performance.     

Exploring the linkage between human capital and economic growth: A look at 141 developing and developed countries

As a factor of production, human capital is defined both in its health and educational dimensions, incorporating qualitative and quantitative aspects. Using a panel of 141 countries (93 developing and 48 developed), we attempt to explore and compare the impact of human capital on economic growth at different development stages. For our estimation, we employ the System Generalized Methods of Moments (SGMM) for the period 1980–2008. Our findings reveal that all aspects of human capital positively influence growth in developing countries, especially life expectancy gain, which may be explained by the demographic transition these countries are going through. However, the scenario is different for developed countries, where increased life expectancy posits a drag on economic growth, probably because of the increasingly aging population and dependency ratio. Only when life expectancy is omitted does health expenditure, along with other educational measures of human capital, help sustain growth in developed countries.     

关于北京市改组改造国有资本投资运营公司的思考和建议

改组改造“国有资本投资运营公司”是完善国资监管体制的重要举措,也是“以管资本为主加强国有资产监管”的重要实现手段。本文界定了国有资本投资运营公司的概念,系统阐述国有资本投资运营公司的功能定位、成立方式、数量设置及国资委与国有资本投资运营公司之间的关系,并结合当前北京市国资国企改革发展实际,围绕北京市属国有企业如何改组改造国有资本投资运营公司等核心问题提出了相关政策建议。