Patience, Risk-Taking, and Human Capital Investment Across Countries

Patience and risk-taking – two preference components that steer intertemporal decision-making – are fundamental to human capital investment decisions. To understand how they contribute to international skill differences, we combine PISA tests with the Global Preference Survey. We find that opposing effects of patience (positive) and risk-taking (negative) together account for two-thirds of the cross-country variation in student skills. In an identification strategy addressing unobserved residence-country features, we find similar results when assigning migrant students their country-of-origin preferences in models with residence-country fixed effects. Associations of national preferences with family and school inputs suggest that both may act as channels.

Factors Affecting Labor Productivity: An Empirical Evidence from Pakistan

Labor productivity is important as it is the major factor determining nations' living standards. This study analyzes the factors affecting labor productivity in Pakistan using time series data. ARDL model is applied for estimation of the long run relationship of variables for the period 1981-2018. Data have been taken from the Handbook of Statistics of State Bank of Pakistan and various economic surveys of Pakistan. The findings show that wages, human capital investment, labor force participation, and inflation significantly affect labor productivity. The results indicate that wage rate has a positive effect on labor productivity, and human capital investment also is positively related to labor productivity. At the same time, labor force participation and inflation are negatively related to labor productivity. These findings imply that labor productivity can be raised by increasing the wage rate and investing more in human capital. Results are consistent with efficiency wage theory and human capital theory.

Valuing Life as an Asset, as a Statistic, and at Gunpoint

Rationalizing the stark differences between the Human Capital (HK) and the Statistical Values (VSL) of a human life is complicated by the absence of common foundations. We solve a human capital investment model with longevity risk to characterize the HK. The associated indirect utility yields the willingness to pay (WTP) against mortality; the marginal WTP solves the VSL. Indifference between life and certain death characterizes the limiting WTP and provides a Gunpoint Value (GPV). A structural estimation reveals similar HK (300 K$) and GPV (251 K$) and explains a much larger VSL (4.98 M$) by a strongly concave WTP.

Capital Structure Impact On The Human Capital Investment: Eastern European Countries Case

Among growth factors of a company, its human capital, because of its hardly imitable trait. However, investing in human capital is intangible and risky, which makes its funding arduous. This article considered the impact of the company’s capital structure on the human capital investment decision through training using probit regressions. Among a sample of SMEs from 24 Eastern European countries, the results confirmed that bank loans foster trainings. However, an increase in self-financing slows down such investments.