Munich Personal RePEc Archive

Norms as indicators of human capital investments effectiveness

Pyastolov, S.M. (2007): Norms as indicators of human capital investments effectiveness. Published in: Investment Research and Analysis Journal , Vol. 1, No. II (2007): pp. 25-37.

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This paper analyses Individual Labor Supply (ILS) survey data gathered on various russian labor markets. Institutional parameters of the ILS schedule, their influences on ILS elasticities as well as the shapes of the ILS curves have been the special points of interest of the researches. Besides the canonical C-shaped and the S-shaped curves their mirrored reflections and also L-shaped and J-shaped forms were observed. The "backward bend" concept for poor households and the S-shaped LS curve concept for the household with primary, secondary and tertiary workers helped to find explanations for the cases. The dummies for regions and professions as well as "institutional numbers" were successfully used in order to improve the regression quality. It was revealed that threshold effects, noted as changes in the market strategies - shifts to a different ILS curve type, take place because workers behavioral patterns are framed by certain types of conventions. So behavioral patterns change when a convention, that a worker positions him(her)self in, is changing. The degree of such effects probability increase, when households are forced by external factors to review their economic strategies. Thus assuming that the shape of an ILS function as well as current wage value (roubles per hour) characterizes the economic agent strategy, a hypothesis has been worked out: The strategy choice made by a worker in standard labor market situations may be predicted with a certain degree of accuracy, if the combi¬nation of the individual institutional norms values distribution is known. Hence following Douglass North's proposition that institutions are not only carries of history but also accumulators and means of education, the author suggests that the combination of institutional norms might be regarded as a signal of Individual Human Capital Investments Effectiveness.

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