C110, College Building, Middlesex University, The Burroughs, London NW4 4BT
Human capital investments are risky, and some are more risky than others: should I get a degree in management, or study some specialist engineering subject? For the individual the former – consisting of a bit of psychology, a bit of accounting, a bit of marketing, a bit of economics – may be lower risk because the skill set is transferable to many roles in any industry; the latter requires greater exertion and, while it could lead to a brilliant career, might also lead nowhere since it is directly applicable in a much narrower set of circumstances. In aggregate, however, the low-risk choices can become a problem: how many management, law or media studies degree-holders does society need? Wouldn't we be better off if more students took the plunge into engineering, science or the arts?
All industrial societies have institutions that can be understood as insurance mechanisms to help spread the risk entailed in human capital investments. These mechanisms include subsidies for education and training (i.e. all or part of the monetary element of the initial skill investment is socialised), various provisions for job security (the cost of losing a job match for your skill is shared with your employer), and unemployment benefit and re-training subsidies (the cost of losing a job match for your skill is socialised). When insurance provisions are weak, we expect people to self-insure by studying general/transferable subjects; as insurance becomes stronger, more people will pursue riskier (in the sense that the chance of finding and sustaining a good job match is lower) courses of study.
One implication is that differences in insurance, between countries or within counties over time, will produce differences in the composition of national human capital portfolios. These differences will not be reflected in standard human capital measures, which compare levels of human capital based on years of schooling.
In two recent papers, Andrea Filippetti and Dr Frederick Guy have studied the impact of insurance on the relationship between measured human capital and innovation. Both are international comparative studies. The measures of innovation and human capital are different in the two papers, as are the samples of countries and the data structures (one is a cross-section incorporating firm level survey data, the other is a panel of country level data only); in both papers, the measures of insurance are standard OECD indices of employment protection legislation and the short-term earnings replacement rate of unemployment insurance. In both cases we find that is stronger when insurance is strong. They are currently studying the effect of the human capital-insurance interaction on productivity growth. Dr Guy will present results from the first two papers (and, with luck, preliminary results from the new work on productivity).
Frederick Guy received his BS in Political Economy of Natural Resources from the University of California at Berkeley; worked for 12 years as a manager, consultant, and company director in consumer cooperatives in grocery retailing, wholesaling, and housing; received his PhD in Economics from the University of Massachusetts, Amherst; and spent two years at the Centre for Business Research at Cambridge University.
Since 1997, he has taught in the Department of Management at Birkbeck, University of London, where he is currently Senior Lecturer. His book The Global Environment of Business is published by Oxford University Press; his research has also appeared in the Journal of Economic Geography, Review of International Political Economy, British Journal of Industrial Relations, Economics Letters, Spatial Economic Analysis, and Environment and Planning A, among others.
All are welcome - master's and PhD students are particularly encouraged to attend
Refreshments will be provided. To confirm a place please notify Pamela Macaulay.