Human Capital in Labor Economics - Novel Perspectives and Research Strategies

Abstract

"The level of education grows steadily. Between 1980 and 2014, the percentage of male regular full-time workers in West Germany with a degree from a university or university of applied science rose from six to twenty percent. However, human capital is not equally distributed in Germany. On the one hand, there are regions where over 30 percent of the workforce went to university or university of applied science. On the other hand, there are regions in which less than five percent of the workforce studied at a university. <br> <br> Scholars argue that human capital raises the productivity of workers and societies. Analogously to investments in physical capital, investments in human capital increase production capabilities and efficiency. Economists, therefore, believe that human capital is crucial for economic development and explain income differences between countries by differences in their human capital endowments. The literature also postulates that individuals themselves benefit from investments in their human capital through higher earnings. Additionally, human capital might create positive spillover effects and raise the productivity of peers. <br> <br> This thesis contributes to two research areas on human capital in labor economics. First, I add to the literature on human capital externalities, which investigates spillover effects from individual human capital on peers. In particular, I aim to add new perspectives on the dynamics and the spatial scope of human capital externalities to the existing literature. Second, I contribute to the literature on the labor market consequences of globalization. Here, I highlight the importance of firm-internal restructuring of the workforce as an understudied adjustment channel to foreign direct investment. While the former research area focuses on the external effects of human capital on workers, the latter addresses the development of human capital of workers after an exogenous shock. <br> <br> So far, the literature on human capital externalities focuses on spillover effects from the stock of high-skilled workers within predefined geographical boundaries. This thesis aims to add two novel perspectives to the literature. In the first chapter, I analyze external effects of intra-country migration flows of high-skilled workers. Specifically, I decompose the regional stock of high-skilled workers into immigration and emigration of high-skilled workers, as well as labor market entries and exits of high-skilled workers. The decomposition contributes to the understanding of knowledge spillovers and enables me to assess how knowledge spillovers accrue over time. In the second chapter, I investigate the spatial decay of knowledge spillovers. For the first time, I apply functional data analysis to geocoded register data to estimate a functional representation of knowledge spillovers that depends on distance. This approach allows me to determine the spatial scope of knowledge spillovers and to assess how fast spillovers attenuate with distance. Furthermore, both chapters use a novel estimation procedure that potentially allows disentangling human capital externalities from labor market demand and supply effects. <br> <br> Another focus of the thesis lays on labor market effects of globalization. Globalization changes the labor demand of firms. The empirical literature on labor market consequences of globalization focuses on effects on earnings and displacements. Overall, results suggest heterogeneous effects on different groups of workers. Although earnings and displacements are important channels to adjust the labor force, the literature has overlooked that globalization might also incentivize firms to restructure their workforce internally. For several reasons, firms might benefit from restructuring their workforce internally instead of hiring and firing workers. For instance, incumbent workers have firm-specific human capital and thus might be more valuable than outsiders. Furthermore, asymmetric information about worker skills is less problematic when hiring internally. The third chapter of the thesis therefore studies how foreign direct investment influences internal restructuring. In particular, I assess the impact of foreign direct investment on internal up- and downgrades of workers to more or less complex jobs." (Author's abstract, IAB-Doku) ((en))

Cite article

Eppelsheimer, J. (2020): Human Capital in Labor Economics - Novel Perspectives and Research Strategies. Regensburg, 156 p.