Human capital acquisition and occupational choice: Implications for economic development

Using household-level data from Mexico we document patterns among schooling, entrepreneurial decisions and household characteristics such as for example assets, talent of household members and age of your family head. Motivated by our findings, we create a heterogeneous-agent, incomplete-markets, overlapping-generations dynasty model. Households jointly decide over their life cycle on (i) kids' human capital investments (schooling) and (ii) parents' entry, exit and investment into alternative entrepreneurial modes (subsistence and modern). With financial constraints most of these are co-determined. A calibrated version of our model can account for the broad correlation patterns uncovered in the info within and across generations, e.g., a non-monotonic relationship between educational choices and assets across occupations, growth in profits and employment for modern firms only, and dynastic persistence across generations in education and wealth. Endogenous human capital acquisition is just a key driver of inequality and intergenerational persistence. Eliminating this channel would decrease the most truly effective 10% income share by 47%. Eliminating within-period borrowing constraints would increase average household expenditure by 7.1% and benefit the middle-income group, reducing top and bottom expenditure shares. It would also reduce by 28% the correlation between household assets and kids' schooling levels.

Newcomers contribute to organizational innovation by bringing in new knowledge and ideas, on the main one hand, and by collaborating and exchanging with incumbents, on the other. We propose an organization's ability to make use of these contributions is influenced by hiring rate, hiring rate change, and hiring rate dispersion, which affect the flow of new ideas into the business and the degree of collaboration between newcomers and incumbents. Using four years of data from a large, multi-industry sample, we discover that hiring rate and hiring rate dispersion increase organizational innovation. We also find that increases in hiring rates from year to year are positively related to innovation for organizations with an increase of collaborative work practices, while the connection between hiring rate dispersion and innovation is less positive when organizations do have more collaborative work practices. This study highlights how temporal patterns of hiring influence human capital acquisition and development.

An 'options' view of human capital acquisition explains value creation through timedeferred, sequential, path-dependent investment choices and addresses gaps in the resourcebased theory explanation of the partnership between human resources and competitive advantage. Firms will spend money on options for human capital, using alternative employment arrangements like temporary/contractual/part-time workers and internships, or by outsourcing the job, when uncertainty associated with human capital is high and investments in human capital are largely irreversible. We discuss various options for skills and employees, two interrelated the different parts of human capital. They are flexibility options, options to wait or defer, options to abandon, learning options, and switching options. The opportunity cost of not having options is quantifiable, helping to make the real options approach valuable for strategic HRM decisions.