Description: Economic Freedom, Human Rights, and the Returns to Human Capital : An Evaluation of the Schultz Hypothesis

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Economic Freedom, Human Rights, and the Returns to Human Capital : An Evaluation of the Schultz Hypothesis

According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create "disequilibria." In such environments, the ability of firms and in...

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Bibliographic Details
Main Authors:	King, Elizabeth M., Montenegro, Claudio E., Orazem, Peter F.
Language:	English
Published:	2012
Subjects:	ALLOCATION ALLOCATION OF RESOURCES BANK POLICY CAPITAL FLOW CAPITAL FLOWS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKETS CAPITALISM CITIZENS CIVIL RIGHTS COMPARATIVE ADVANTAGE COMPARATIVE ECONOMICS COMPETITIVE MARKETS CONTRACT ENFORCEMENT CREDIT MARKETS CRISES DECENTRALIZATION DECENTRALIZED DECISIONS DEMOCRACY DEMOCRATIC INSTITUTIONS DERIVED DEMAND DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT ECONOMICS DICTATORSHIP DIMINISHING RETURNS DISCRIMINATION DISEQUILIBRIUM DIVISION OF LABOR DUMMY VARIABLE DUMMY VARIABLES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DECISIONS ECONOMIC DEVELOPMENT ECONOMIC EFFICIENCY ECONOMIC FREEDOM ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC OPPORTUNITY ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC RESEARCH ECONOMIC RIGHTS ECONOMIC SYSTEMS ECONOMICS EDUCATED GROUPS ELASTICITY EQUAL ACCESS EQUAL RIGHTS EQUILIBRIUM THEORY EQUILIBRIUM UNEMPLOYMENT EQUILIBRIUM WAGES EXPENDITURES FERTILITY FINANCIAL INSTITUTIONS FINANCIAL MARKETS FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FUTURES GDP GDP DEFLATOR GDP PER CAPITA GLOBAL DEVELOPMENT GLOBAL INEQUALITY GLOBAL MARKETS GLOBALIZATION GOVERNMENT EXPENDITURE GOVERNMENT INVESTMENT GOVERNMENT POLICIES GOVERNMENT POLICY GOVERNMENT REGULATIONS GROSS DOMESTIC PRODUCT GROSS DOMESTIC PRODUCT PER CAPITA GROWTH RATE HEALTH CARE HOST COUNTRY HOUSEHOLD INCOME HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RIGHTS INCOME GROWTH INCOME INEQUALITY INCOME LEVELS INCREASING RETURNS INDIVIDUAL DECISIONS INDIVIDUAL FREEDOMS INDIVIDUAL RIGHTS INDUSTRIAL REVOLUTION INEFFICIENCY INFLATION INFLATION RATES INFORMATION TECHNOLOGIES INNOVATION INNOVATIONS INSTITUTIONAL ECONOMICS INSTRUMENT INSURANCE INTEREST RATE INTEREST RATES INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL COMMUNITY INTERNATIONAL MIGRATION INTERNATIONAL TRADE INTERPOLATIONS INVESTING INVESTMENT CLIMATE INVESTMENT DECISIONS JOB CREATION LABOR DEMAND LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET INDICATORS LABOR MARKET POLICIES LABOR MARKETS LABOR SUPPLY LIFE EXPECTANCY LIQUIDITY LIVING STANDARDS MACROECONOMIC GROWTH MARGINAL PRODUCT MARITAL STATUS MARKET INFORMATION MARKET RETURN MARKET WAGE MERCHANTS MIGRATION MINIMUM WAGES MINORITY MONETARY POLICY MONETARY STABILITY NEGATIVE SHOCKS NUMBER OF CHILDREN OCCUPATIONAL MOBILITY PARLIAMENTARY SEATS PARLIAMENTARY UNION PER CAPITA INCOMES PERSONAL INCOME POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POLITICAL INSTITUTIONS POLITICAL PARTICIPATION POLITICAL POWER POLITICAL RIGHTS POLITICAL STABILITY POLITICAL SYSTEMS POPULATION SIZE PRICE CONTROLS PRIVATE ENTERPRISE PRIVATE OWNERSHIP PRODUCTIVITY PRODUCTIVITY GROWTH PROGRESS PROGRESSIVE TAX PROPERTY RIGHTS RATE OF GROWTH RATE OF RETURN RATE OF RETURNS RATES OF RETURN REAL GDP REAL GROSS DOMESTIC PRODUCT RENTS RESOURCE ALLOCATION RESOURCE ALLOCATIONS RESPECT RETURN RETURNS RIGHTS OF WOMEN RULE OF LAW RURAL AREAS RURAL LABOR RURAL MARKETS RURAL RESIDENCE RURAL RESIDENTS SANITATION SCHOOL QUALITY SEARCH COSTS SEGMENTS OF SOCIETY SKILLED WORKERS SOCIAL RETURNS SPECIALIZATION STATE UNIVERSITY TAX TAX RATES TAXATION TECHNICAL ASSISTANCE TRADING TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TRANSITION ECONOMY TRANSPARENCY UNDUE INFLUENCE UNEMPLOYED UNEMPLOYED WORKER UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNSKILLED LABOR URBAN AREAS URBAN WORKERS USURY LAWS VALUE OF OUTPUT WAGE DISTRIBUTION WAGE FLEXIBILITY WAGE STRUCTURE WAGES WOMEN IN PARLIAMENT WORK EXPERIENCE WORKFORCE WORKING POPULATION
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100830084932 http://hdl.handle.net/10986/3890

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Summary:	According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create "disequilibria." In such environments, the ability of firms and individuals to adapt their resource allocations to shocks becomes most valuable. In the case of negative shocks, government policies that mitigate the impact of the shock will also limit the returns to the skills of managing risk or adapting resources to changing market forces. In the case of positive shocks, government policies may restrict access to credit, labor, or financial markets in ways that limit reallocation of resources toward newly emerging profitable sectors. This paper tests the hypothesis that the returns to skills are highest in countries that allow individuals to respond to shocks. Using estimated returns to schooling and work experience from 122 household surveys in 86 developing countries, this paper demonstrates a strong positive correlation between the returns to human capital and economic freedom, an effect that is observed throughout the wage distribution. Economic freedom benefits those workers who have attained the most schooling as well as those who have accumulated the most work experience.