Understanding the mechanisms through which adverse childhood experiences affect lifetime economic outcomes

an article by Stefanie Schurer (University of Sydney, Australia; IZA Bonn, Germany; ARC Life Course Centre, Australia) and Kristian Trajkovski and Tara Hariharan (University of Sydney, Australia) published in Labour Economics Volume 61 (December 2019)

Highlights

• We use British cohort data to study the economic penalties of adverse childhood experiences (ACE).
• ACE are associated with lower earnings, welfare dependence, and subjective poverty at age 55.
• The income penalty of ACE is mainly produced by parental neglect.
• Observed income differences by neglect exposure is almost fully explained by differences in human capital.
• Our findings contribute to a wider discussion on the multidimensionality of childhood poverty.

Abstract

Over the past two decades, researchers have shown a growing interest in the role of adverse childhood experiences (ACEs) – children's confrontation with maltreatment and household dysfunction – in shaping health outcomes.

This is the first study to quantify the economic penalties of ACEs and identify the mechanisms which produce the relationship.

We source data from the National Child Development Study to construct an ACE index based on prospective childhood information. We estimate a robust earnings penalty of 9% for each additional ACE, a 25% higher probability of being welfare dependent, and a 27% higher probability of subjective poverty at age 55, over and above the influence of childhood socioeconomic disadvantage.

The income penalty of ACEs is mainly produced by parental neglect, a component of the ACE index based on teacher assessments. It is observed for children from all socioeconomic backgrounds. Observed differences in later-life earnings between children with and without neglect exposure can be almost fully explained by observable differences in human capital accumulated by the beginning of mid-age.

The productivity loss in an economy due to parental neglect is likely to be high.

Our findings contribute to a wider discussion on the multidimensionality of childhood poverty.

JEL classification: I32, J12

Associated research data

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An EU tax credit to preserve incentives for investment in human capital in the context of intra-EU migration

a column by Debora Revoltella, Philipp-Bastian Brutscher and Patricia Wruuck for VOX: CEPR’s Policy Portal

Spending on education underpins the formation of human capital. But intra-EU labour mobility means that returns to such spending often accrue somewhere other than where the investment takes place, which can lead to sub-optimal levels of investment in countries that are subject to persistent outward migration.

This column advocates for more intra-EU coordination on investment in education and proposes a novel mechanism for fostering more investment in human capital across the EU.

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The impact of technological progress on labour markets: policy challenges

an article by Maarten Goos (Utrecht University, the Netherlands) published in Oxford Review of Economic Policy Volume 34 Issue 3 (Autumn 2018)

Abstract

This paper gives an overview of current thinking by economists about the consequences of ongoing technological progress for labour markets, and discusses policy implications.

In economics, the impact of technological progress on labour markets is understood by the following two channels:

1. the nature of interactions between differently skilled workers and new technologies affecting labour demand and
2. the equilibrium effects of technological progress through consequent changes in labour supply and product markets.

The paper explains how the ongoing Digital Revolution is characterized by a complex interplay between worker skills and digital capital in the workplace, and consequent changes in job mobility for workers and in output prices affecting consumer demand for goods and services. In particular, it explains how current worker–technology interactions and the equilibrium effects they entail combine to create economy-wide job polarization with winners and losers from ongoing technological progress.

The paper therefore concludes by discussing a set of policy interventions to ensure that the benefits of the Digital Revolution are broadly shared.

JEL Classification: J24, J28, O30

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Human capital and the supply of agricultural workers

a column by Tommaso Porzio for VOX: CEPR’s Policy Portal

The share of the population employed in agriculture across the globe declined steeply over the second half of the 20th century. This coincided with an unprecedented increase in average years of schooling.

This column explores whether these two trends are related.

The results lend support to the idea that increased schooling led more workers to sort out of agricultural work. Whether reallocation out of agriculture has been beneficial for growth, however, remains to be seen.

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Demographics and long-run growth

a column by Thomas Cooley and Espen Henriksen for VOX: CEPR’s Policy Portal

Demographic change represents an important contributing factor to the slowdown of long-run growth.

This column explores some of the channels through which this occurs and how the effects of demographic change can be mitigated. Policies that target consumption-saving choices, labour-leisure choices, and human capital accumulation over the lifecycle are likely to be most effective.

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A human capital measurement scale

an article by Juarez Domingos Frasson Vidotto, Helio Aisenberg Ferenhof, Paulo Mauricio Selig and Rogerio Cid Bastos, (Universidade Federal de Santa Catarina, Florianópolis, Brazil) published in Journal of Intellectual Capital Volume 18 Issue 2 (2017)

Abstract

Purpose
Despite the large number of academic publications in human capital, there are few instruments to measure it. The purpose of this paper is to develop a holistic scale to measure human capital, considering aspects related to competence, attitudes, skills, leadership, and organizational memory.

Design/methodology/approach
First, a literature review of the existing measurement models was carried out. Second, based on the results the authors developed a scale and a questionnaire that were applied in a financial institution in Santa Catarina, Brazil, supported by a factor analysis and a reliability analysis.

Findings
As a result of this study a scale consisting of 13 variables of human capital emerged that have been grouped into three factors – leadership and motivation; qualifications; and satisfaction and creativity – which can assist in the organization’s human capital measurement. From a theoretical view, a more holistic scale is provided, which helps to overcome a unilateral focus on knowledge (intangibles).

Research limitations/implications
This work points out that the survey data were collected from a sample of 220 relationship managers of a specific financial institution. The results should be tested in other banks or organizations from other sectors to check their suitability and to be generalized.

Practical implications
From a practical point of view, it contributes a “tool” that can assist in the measurement of human capital and in the knowledge contained, dimensioning the organizational memory and human repositories.

Originality/value
This is the first study that provides a scale to measure organizational human capital from the Brazilian financial perspective.

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Does parents’ income matter in intergenerational transmission of human capital? A decomposition analysis

an article by Fareed Shareef (Government Emerson College, Multan, Pakistan) and Muhammad Junaid Khawaja and Toseef Azid, (College of Business and Economics, Qassim University, Saudi Arabia) published in International Journal of Social Economics Volume 44 Issue 2 (February 2017)

Abstract

Purpose
Since the pristine works of Schultz (1961) and Becker (1964, 1975), the concept of intergenerational transmission has constantly been in the front line of discussion among the social scientists to divulge the sources and channels through which diffusion of socio-economic status can take place across the generations. The purpose of this paper is to explore the intergeneration links via monetary channels through decomposition technique.

Design/methodology/approach
Using a sample of 613 households selecting through systematic sampling from Multan district (Pakistan). Making a three tier analyses, i.e. simple, sequential and double decomposition, the findings of the models support the hypothesis of the study that children of high-income parents also fall in high-income groups.

Findings
The simple decomposition analysis using education as the pathway factor reveals that parental income is pivotal in determining the education and ultimately the level of their child’s income. The sequential analysis incorporates occupation and depicts a positive association between the offspring education and occupation. In the double decomposition analysis, the direct component reveals that even among those children with the same level of education, higher parental income is linked with the better occupational achievements, whereas indirect component explains the impact of parental income on occupation via education of the children. In other words, it explains the degree to which children with higher family income acquire more education and consequently get better jobs.

Research limitations/implications
In Pakistan like the other developing countries nationwide surveys are not conducted at the government level.

Practical implications
This study is providing the guideline to the policy makers for the formulating their policies for developing and managing the human capital.

Social implications
The findings of this study are useful for reducing the inequality in the society.

Originality/value
This is an original and first time it is going to be conducted in a country like Pakistan

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How universities boost economic growth

a paper by Anna Valero (research economist in CEP’s growth programme) and John Van Reenen (professor of economics at MIT and formerly director of CEP) published in CentrePiece Volume 21 Issue 3 (Winter 2016) Paper No CEPCP488

Abstract

The expansion of higher education has helped to fuel economic growth around the world, according to research by Anna Valero and John Van Reenen.

Analysing data on 15,000 universities in 78 countries for the period since 1950, they find that there is a strong positive impact of university expansion on regional economic growth. Doubling the number of universities in a region raises future GDP per capita by 4%.

Focusing on the immediate challenges for the UK, they note that the benefits of university expansion far outweigh the costs, but Brexit poses significant risks.

Until now, UK universities have thrived in a climate of openness to international students, academics and collaboration.

JEL Classification: I23, I25, J24, O10, O31

Full paper

This paper summarises The Economic Impact of Universities: Evidence from Across the Globe by Anna Valero and John Van Reenen, CEP Discussion Paper No. 1444, August 2016

Full text (PDF 83pp)

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Naturalisation and on-the-job training: evidence from first-generation immigrants in Germany

an article by Friederike von Haaren-Giebel and Malte Sandner (Leibniz Universität, Hannover) published in IZA Journal of Migration Volume 5 (2016)

Abstract

This paper empirically analyses the effect of naturalisation on on-the-job training (OJT) participation among first-generation immigrants in Germany. OJT is associated with improved labour market outcomes and provides therefore an indicator for labour market integration.

Naturalisation is assumed to act as a signal of the employee’s commitment to the host country and may thus increase employers’ likelihood of offering OJT. Testing the theoretical link with multivariate estimations (based on the German Socio-Economic Panel) shows a positive and significant correlation. To reduce selection bias on observables, propensity score matching is applied, yielding a significant average treatment effect.

Full text

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What use is ‘social investment’?

an article by Brian Nolan (University College Dublin, Ireland) published in Journal of European Social Policy Volume 23 Number 5 (December 2013)

Abstract

The notion of ‘social investment’ has come to play a major part in debates about the role of social spending and the future of welfare states in Europe. This paper argues that social investment can be seen as a more or less detailed orientation or paradigm for social policies and spending or as a conceptual base and framework for analysis, and that it is also increasingly employed for political or rhetorical as well as academic purposes.

It then sets out some serious issues and concerns in that regard, including whether social investment can credibly be presented as the paradigm most likely to underpin economic growth per se or indeed employment-friendly growth, whether the distinction between social ‘investment’ and other social spending is robust conceptually and the difficulties faced in seeking to make such a distinction empirically, and whether focusing on that distinction and on a narrowly economic rationale is the most useful way to frame the debate about the future of social spending.

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The determinants of student mobility in Europe: the quality dimension

an article by Linda Van Bouwel and Reinhilde Veugelers (KU Leuven, Belgium) published in European Journal of Higher Education Volume 3 Issue 2 (June 2013)

Abstract

The Bologna Process in Europe aims to increase student mobility, with the purpose of increasing average university quality through fiercer competition for students in a larger, more unified market. However, this beneficial effect of increased student mobility will only occur if student mobility is guided by quality considerations.

We examine whether the quality of a country’s higher education system helps explain macro-flows of foreign tertiary students in Europe. Using various measures for the quality of a country’s higher education system in an extended gravity model, we find that quality has a positive and significant effect on the size and direction of flows of students exchanged between 31 European countries.

At the graduate level, however, the driving force for student mobility appears to be the lack of educational opportunities in the home country.

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Female Labour Supply, Human Capital and Welfare Reform

COWLES FOUNDATION DISCUSSION PAPER NO. 1892 by Richard Blundell (University College London and Institute for Fiscal Studies), Monica Costa Dias (Institute for Fiscal Studies and CEF-UP at the University of Porto), Costas Meghir (Yale University, Institute for Fiscal Studies and NBER) and Jonathan Shaw (Institute for Fiscal Studies and University College London)

Abstract

We consider the impact of Tax Credits and income support programmes on female education choice, employment, hours and human capital accumulation over the life-cycle. We thus analyse both the short run incentive effects and the longer run implications of such programmes.

By allowing for risk aversion and savings we are also able to quantify the insurance value of alternative programmes. We find important incentive effects on education choice, and labor supply, with single mothers having the most elastic labour supply. Returns to labour market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education.

For those with lower education the welfare programmes are shown to have substantial insurance value. Based on the model marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.

Full text (PDF 54pp)

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The effects of objective career success on subsequent subjective career success

an article by Stephen A. Stumpf and Walter G. Tymon Jr. (Villanova University, USA) published in Journal of Vocational Behavior Volume 81 Issue 3 (December 2012)

Abstract

We use a sample of working adults (N = 638) to explore the effects of past objective career success (mobility, promotions, and salary change) on current subjective success (human capital assessments by one’s managers, core self evaluations, satisfaction with one’s career) by gender, across an economic cycle (2004–2011), controlling for career stage.

Results support a strong influence of past promotions, and less so for salary changes, on subjective career success. These effects were stronger for men and during the economic contraction, with managers being affected in their assessments based on the employees’ past promotions. In contrast, past job mobility did not relate to subjective career success for either gender in periods of economic expansion or contraction.

Evidence for an interactive perspective of career success whereby past objective success affects current subjective success is presented, as well as potential implications of the findings.

Highlights

► Past promotions strongly influence managerial assessments of human capital and core self evaluations.
► Past promotions influence a person's satisfaction with his/her career.
► Past salary increases influence managerial assessments of human capital.
► Past job mobility did not influence one's subjective assessments of his/her career success.
► Some effects of the economic cycle and of past success were stronger for men than for women.

Figures and tables from this article

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On the Move: Determinants of Job and Residential Mobility in Different Sectors

an article by Kristin Kronenberg (Open University of the Netherlands) and Martin Carree (Maastricht University, The Netherlands) published in Urban Studies Volume 49 Number 16 (December 2012)

Abstract

This study identifies and evaluates determinants of employees’ job and residential mobility.

It examines the mobility of full-time employees in selected sectors in 2003/04, using register data for the Netherlands. A multinomial model of job and residential change is estimated. The results illustrate how individuals decide upon changing jobs and/or relocating by taking into account the strength of family- and job-related ties, career opportunities within and outside the firm, and attachment to the present dwelling.

A long commuting distance was found to encourage both job and housing mobility, often simultaneously. Employees living/working in large cities are prone to change jobs, or to relocate. The influence of human capital indicators on mobility was found to be highly sector-dependent.

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Education, Intergenerational Mobility and Inequality

a Working Paper by Nathalie Chusseau (EQUIPPE, University of Lille 1) and Joël Hellier (EQUIPPE, Univ. of Lille 1, and LEMNA, Univ. of Nantes) in collaboration with Bassem Ben-Halima (EQUIPPE, University of Lille 1) published by ECINEQ (Society for the Study of Economic Inequality) (September 2012)

Abstract

We review the economic literature on the impacts of the several dimensions of education upon intergenerational inequality persistency.

It is firstly outlined that the critical increase in the population education level in all countries has not come with lower inequality. The basic tools of education and intergenerational mobility modelling are subsequently exposed (OLG, education functions, education decision making etc.).

The following two theoretical sections analyse the cases in which education leads

1. to human capital convergence in the long term and
2. to social stratification with the emerging of under-education traps (situations in which certain dynasties remain continuously under-educated).

A simple modelling of both cases is proposed for two types of educational decisions, one based on the family expenditure on education and the other on the time spent for education.

The factors that generate social stratification and under education traps are especially underlined.

The empirical literature on the determinants of educational attainment and intergenerational mobility is finally reviewed.

This reveals the crucial impact of family backgrounds on educational attainment in all countries. It also demonstrates huge and lasting differences across countries in terms of intergenerational mobility.

JEL Classifications: E24, I24, J24, J62

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Can Governments Improve Higher Education Through ‘Informing Choice’?

an article by Peter Davies (University of Birmingham) published in British Journal of Educational Studies Volume 60 Issue 3 (2012)

Abstract

Over the past decade higher education policy in England has gradually switched from a stance of ‘government as purchaser’ to ‘government as informer’.

During 2012 this policy stance has been intensified through new requirements for the advice provided by schools and the introduction of ‘Key Information Sets’ which are intended to ‘drive up quality’ through informed choice.

This paper documents this policy shift and subjects it to critical scrutiny.

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Do colleges and universities increase their region’s human capital?

an article by Jaison R. Abel and Richard Deitz (Federal Reserve Bank of New York, Research and Statistics Group) published in Journal of Economic Geography Volume 12 Number 3 (May 2012)

Abstract

We investigate whether the degree production and R&D activities of colleges and universities are related to the amount and types of human capital in the metropolitan areas where they are located.

Our results indicate only a small positive relationship exists between a metropolitan area’s production and stock of human capital, suggesting that migration plays an important role in the geographic distribution of human capital.

We also find that academic R&D activities increase local human capital levels, suggesting that spillovers from such activities can raise the demand for human capital. Consistent with these results, we show that metropolitan areas with more higher education activity tend to have a larger share of workers in high human capital occupations.

Thus, this research indicates that colleges and universities can raise local human capital levels by increasing both the supply of and demand for skill.

JEL codes: J24 O18 R10

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Distribution and determinants of lifetime unemployment

an article by Achim Schmillen (Institute for Employment Research, Nuremberg; Osteuropa-Institut Regensburg; and University of Regensburg, Germany) and Joachim Möller (Institute for Employment Research, Nuremberg; University of Regensburg, Germany and Institute for the Study of Labor, Bonn) published in Labour Economics Volume 19 Issue 1 (January 2012)

Abstract

The empirical literature on unemployment almost exclusively focuses on the duration of distinct unemployment spells. In contrast, we use a unique administrative micro data set for the time span 1975–2004 to investigate individual lifetime unemployment – defined as the cumulative length of all unemployment spells over a 25-year period. This new perspective enables us to answer questions regarding the long-term distribution and determinants of unemployment for birth cohorts 1950–1954.

We show that lifetime unemployment is highly concentrated on a small part of the population. With censored quantile regressions we investigate the long-lasting influence of bad luck early in the professional career. Controlling for individual and firm characteristics we find that choosing at a young age what turns out to be an unfavourable occupation significantly increases the predicted amount of lifetime unemployment.

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On the economics of sleeping

an article by Tinna Laufey Asgeirsdottir and Gylfi Zoega published in Mind & Society Volume 10 Number 2 (December 2011)

Abstract
Sleep is a form of rejuvenation, which can be treated as a source of energy. This energy is available in limited quantities and individuals must decide when it should be renewed and when it should be consumed. Sleeping involves investing in energy and alertness but also a sacrifice of time. We derive and solve the inter-temporal utility-maximisation problem on the length of sleep to obtain optimality conditions for the length of sleep. Several applications emerge from the analysis. These include the effects of labour-market opportunities on sleep patterns; the effect of having children; the consequences of decreased division of labor within the household; and the relationship between sleep deprivation and obesity. When data allows, those outcomes are tested using panel data from Iceland. The empirical results are consistent with the predictions of the theoretical model.

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Beyond the prison walls: Some thoughts on prisoner ‘resettlement’ in England and Wales

an article by Roger Moore (Formerly Nottingham Trent University) published by Criminology and Criminal Justice Volume 12 Number 2 (April 2012)

Abstract

In recent years there has been an increased focus on prisoner resettlement in government policy in England and Wales. Two contrasting trends have been evident. Post-release supervision in the form of enhanced monitoring and surveillance for offenders on statutory licence has grown significantly, while post-release support and provision for adult short-sentence prisoners has been minimalist and remains non-mandatory.

This article will examine the problematized status of resettlement in terms of: (a) differentiated meaning; and (b) policy formulation and application.

It is argued that ‘resettlement’ attracts many key assumptions and that societal expectations of what can be achieved may be ideationally and conceptually flawed. The discussion centres on both theoretical connections and uncertainties, together with the respective policy implications.

An indicative schema of ex-prisoner re-entry is outlined for further analytical exploration and critique. ‘Re-entry’, a ‘buzzword’ in the USA, is preferred for this schema rather than ‘resettlement’ which is the favoured term in England and Wales.

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