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National Science Foundation HomeNational Science Foundation - Directorate for Social, Behavioral & Economic Sciences
Social & Economic Sciences (SES)
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Investing in Human Resources


Table of Contents:
Executive Summary
I. The Nature of the Problem
II. Background to This Document
III. The Contribution of Science to Problems of Human Capital
IV. An Agenda for Future Research
V. Data Needs
VI. Methodological Needs
VII. Organizing a Research Strategy on Human Capital
VIII. Prospects for Success in the Human Capital Initiative
IX. Conclusion
Appendix A: Employing a Productive Workforce
Appendix B: Educating for the Future
Appendix C: Fostering Successful Families
Appendix D: Building Strong Neighborhoods
Appendix E: Reducing Disadvantage in a Diverse Society
Appendix F: Overcoming Poverty and Deprivation


The views and comments contained in this document are not necessarily those of the National Science Foundation, but are exclusively those of the workshop participants.

This document was drafted by Rebecca Blank of Northwestern University. It is a synthesis of the reports of working groups convened at the National Science Foundation on March 17-18, 1994, and composed of invited experts on human resource issues. The reports themselves are presented in the six appendices. The working groups were charged by NSF to produce research agendas for high priority areas in response to the Human Capital Initiative launched by the professional associations in the behavioral sciences. The principal objective was to create a strategic plan for basic research within the Human Capital Initiative that encompassed the perspectives of the entire social and behavioral sciences community.

The working groups were:


Report Drafter and Group Convener:
Henry Farber, Princeton University (Economics)
Barry Bluestone, University of Massachusetts (Geography)
Daniel Ilgen, University of Michigan (Psychology)
Arne Kalleberg, University of North Carolina (Sociology)
Robert Kraut, Carnegie Mellon University (Psychology)
Katherine Newman, Columbia University (Anthropology)
Margaret Weir, Brookings Institution (Political Science)


Report Drafter and Group Convener:
Jacquelynne Eccles, University of Michigan (Psychology)
Karl Alexander, Johns Hopkins University (Sociology)
James Heckman, University of Chicago (Economics)
Charles Murray, American Enterprise Institute (Political Science)
Ann Marie Palinczar, University of Michigan (Education)
Barbara Rogoff, University of California, Santa Cruz (Psychology)


Report Drafter and Group Convener:
Martin Whyte, University of Michigan (Sociology)
Daphne Bugental, University of California, Santa Barbara (Psychology)
Andrew Cherlin, Johns Hopkins University (Sociology)
Sheldon Danziger, University of Michigan (Economics)
Susan Hanson, Clark University (Geography)
Ross Matsueda, University of Iowa (Sociology)
Carol Stack, University of California, Berkeley (Anthropology)


Report Drafter and Group Convener:
Ronald Mincy, Ford Foundation (Economics)
Scott Bernstein, Center for Neighborhood Technology
Frank Cancian, University of California, Irvine (Anthropology)
Richard Freeman, Harvard University (Economics)
Robert Sampson, University of Chicago (Sociology)
Elaine Sharp, University of Kansas (Political Science)
Jennifer Wolch, University of Southern California (Geography)


Report Drafter and Group Convener:
James Jones, University of Delaware (Psychology)
Francine Blau, University of Illinois (Economics)
Lawrence Bobo, University of California, Los Angeles (Sociology)
George Borjas, University of California, San Diego (Economics)
Kenneth Meier, University of Wisconsin-Milwaukee (Political Science)
Lawrence Hirschfeld, University of Michigan (Anthropology)
Alexander Stepick, Florida International University (Anthropology)


Report Drafter and Group Convener:
Rebecca Blank, Northwestern University (Economics)
Lindsay Chase-Lansdale, University of Chicago (Psychology)
Robert Hauser, University of Wisconsin (Sociology)
James Johnson, University of North Carolina (Geography)
Paul Peterson, Harvard University (Political Science)

Special thanks for their encouragement and guidance are due to Milton D. Hakel of Bowling Green University, Chair of the Human Capital Initiative Research Agenda Coordinating Committee; Cora B. Marrett, NSF Assistant Director for Social, Behavioral and Economic Sciences; Jeffrey Fenstermacher, NSF Executive Officer for Social, Behavioral and Economic Sciences; Allan Kornberg, NSF Division Director for Social, Behavioral and Economic Research; Alan G. Kraut, Executive Director of the American Psychological Society; and Howard Silver, Executive Director of the Consortium of Social Science Associations.

This document represents the joint efforts of the workshop committees and NSF staff. We would like to thank NSF's Human Capital Initiative Organizing Committee (Daniel Newlon, Economics Program Director & Chair; William Bainbridge, Sociology Program Director; Merry Bullock, Human Cognition and Perception Program Director; and Leslie Zebrowitz, Social Psychology Program Director) and other NSF staff who participated in the workshop.

Executive Summary

The human capital of a nation is a primary determinant of its strength A productive and educated workforce is a necessity for long-term economic growth. Worker productivity depends on the effective use and development of the human capital of all citizens, which means that schools, families, and neighborhoods must function effectively. Unfortunately, there is substantial evidence that the United States is not developing or using the skills of its citizens as fully as possible. Only if the United States invests wisely in its human resources will it be able to maintain its place in a global economy where human creativity and human skill are increasingly more important than raw materials or physical infrastructure.

The document, "Investing in Human Resources: A Strategic Plan for the Human Capital Initiative," lays out a research strategy on human capital issues designed to increase understanding of the nature and causes of existing problems and to evaluate the effectiveness of policies aimed at improving the human resources of America's citizens. Past scientific research on issues of human capital has made a significant contribution to the public understanding of these issues as well as to the specific design of policy. A coordinated, multi-disciplinary research effort, focussed on key theoretical and empirical gaps in the scientific literature, promises substantial future rewards.

Now is a propitious time to launch a major new human capital research initiative. The research community is better prepared than ever before to effectively undertake such an endeavor. The policy community has demonstrated a rising interest in these problems and is increasingly looking to the scientific community to help design and evaluate policies aimed at human capital development.

A research agenda in six key areas is proposed.

1. EMPLOYING A PRODUCTIVE WORKFORCE America needs a skilled workforce and the organization of the workplace must fully utilize workers' skills. A human capital research initiative would improve the scientific understanding of how individual behavior, group interaction, and organizational structure relate to employment and productivity. Among the key questions: How are workers and jobs effectively matched? How are workers motivated to acquire new skills and how are the skills demanded by employers changing? How are high-performance workplaces best organized?


Not all of America's youth are bemg adequately educated. Research focused on education and development of human capital among youth can improve our understanding of the human learning process and how it interacts with school structure and organization. Among the key questions: How can students sustain motivation to learn and perform in school? What organizational reforms are effective in improving student achievement and developing skills that foster life-long learning and productivity?


Families must provide children and adolescents with the resources to become competent adults and productive citizens. Research focused on families can improve our knowledge about the causes and consequences of recent radical shifts in the structure of American domestic life. Among the key questions: What is the effect of America's changing family structure on children's development and behavior? What child/adult interactions within families most impact children's development and result in successful parenting?


A neighborhood environment can facilitate or inhibit the life chances and human capital development of its residents. Research focused on neighborhoods can improve our knowledge of the impact of neighborhoods on their residents. Among the key questions: What are the neighborhood-level social process that determine the nature of peer influences, criminal behavior, employment or civic responsibility? How do neighborhood organizations affect activities and future expectations of children and adults?


America's population is growing in diversity. This creates challenges for workplaces, schools, and public policy. Diversity is also closely linked with disadvantage as certain groups are excluded from economic opportunities. Research in this area can foster understanding of the nature of diversity and help overcome the problems of disadvantage. Among the key questions: How and why do humans categorize people into groups? What are the consequences of categorization? What are the causes of group disadvantage and how is it perpetuated?


Problems of poverty and deprivation remain remarkably stubborn among certain groups in the U.S. Research focused on poverty could better define and describe the causes of poverty and help design and evaluate anti-poverty efforts. Among the key questions: What economic changes are causing deteriorating wages among less skilled workers? How have changes in families interacted with changes in poverty in the U.S.? How do programs designed to reduce poverty shape the lives of low-income families?


In addition to research on the above topics, expanded data collection and the development of new methodologies would produce returns for researchers from all disciplines who are involved in investigating human capital formation and utilization. As our research knowledge expands, there is also a need to create stronger bridges between the research community and the community which designs, implements and evaluates policies that increase our nation's human capital.

I. The Nature of the Problem

The human capital of a nation is a primary determinant of its strength. A productive and educated workforce is a necessity for long-term economic growth. Worker productivity depends on the effective use and development of the human capital of all citizens. Schools must function effectively to produce literate and skilled graduates. Families must function effectively to nurture children and assist in their cognitive and emotional development. Neighborhoods must be safe locations where children are raised and educated and where individuals and families participate in the public and private institutions that undergird the work of our society. Only if the United States invests wisely in its human resources will it be able to maintain its place as a dominant economic competitor in a global economy where human creativity and human skill are increasingly more important than raw materials or physical infrastructure.

There are disturbing trends in the United States today that indicate we are not developing nor using the skills of our citizens as effectively as we might. Workforce productivity has grown only slowly in recent decades. Widening wage inequality between more and less skilled workers raises a concern that some group of American adults are becoming increasingly obsolete in today's economy. Growing racial and ethnic diversity within the adult population has created social tensions that spill over into work environments and limit economic opportunities for disadvantaged groups. Even greater concern surrounds the preparation of today's youth for tomorrow's workplace. On every international comparison of elementary and secondary school achievement in mathematics and science, U.S. students perform worse than students in most other industrialized countries. Substantial changes in America's family structure and functioning also raise questions about how well families are providing children with a secure environment in which to mature and learn. The overall litany of social problems that appears daily on the television screen only underscores these concerns further: problems of crime and violence, particularly among youth; a large underground economy in our nation's cities; continuing economic inequality between different racial and ethnic groups; and stubbornly high levels of poverty, particularly among children and single mothers.

In response to these concerns, this document lays out a research strategy, designed to increase understanding of the nature and causes of these problems and to develop the tools and data necessary to evaluate the effectiveness of policies aimed at improving the human resources of America's citizens. It proposes a coordinated, multi-disciplinary approach that is designed to advance knowledge across a broad spectrum of interconnected issues.

II. Background to This Document

The National Science Foundation's mission statement calls for it to work for the advancement of knowledge for the benefit of humankind. This includes exploring the social and economic world as well as the natural and physical world. NSF has long been deeply involved in the development of human capital through its work to improve science and mathematics education. The creation of the Directorate for Social, Behavioral, and Economic Sciences was intended to provide a more coherent research approach to scientific questions best addressed by the social and behavioral sciences. The formation of this directorate positions the NSF to take the lead in developing a research agenda that will generate knowledge useable by both the public and private sectors in their efforts to develop the nation's human capital.

Interest in human capital issues has grown substantially in both the scientific and the public realms. In 1990, a coalition of professional associations in the behavioral sciences came together to propose a research agenda for their members. They named this the Human Capital Initiative, and it has received widespread interest and political support. For example, the Senate Committee on Appropriations was "pleased to see that the behavioral and psychological sciences communities have produced a comprehensive vision for research in their disciplines called the human capital initiative." This document builds on these efforts within the behavioral sciences, expanding the Human Capital Initiative to include a broader range of issues from both the social and behavioral sciences.

III. The Contribution of Science to Problems of Human Capital

Given these widespread concerns with the use and development of our nation's human resources, the amount of research funding available to study the conditions that better facilitate or constrain human capital resources is amazingly small. Within the National Science Foundation, only 3.2 percent of the FY 1994 budget for research and related activity went to the Division of Social, Behavioral, and Economic Research, and only a limited share of that money went into research on problems directly related to human capital issues.

Yet researchers who work on issues of human capital, from employment to schools to families, have made significant contributions to the public understanding of these issues as well as the specific design of policy. Much of this work is well-known within the scientific community because it has frequently used models, tools, and research methodologies that advanced theoretical and empirical agendas within specific disciplines. An indication of the scientific prominence of this work is exemplified by the recent Nobel Prize awarded to Gary Becker at the University of Chicago, who popularized the term human capital within economics, and whose work on rational models of individual decision-making has influenced researchers throughout the social and behavioral sciences.

Listed here are a few examples of the many research areas where scientific analysis has shaped our current understanding of human capital problems.

Example 1: Labor market research has described the recent deterioration in wage rates and long-term earnings opportunities for less-skilled workers. These changes have been causally related to the growing internationalization of the U.S. economy, changing technologies in the workplace, and changes in labor market institutions. This research has provided direction for the current policy discussion about job training programs and wage subsidies for low-wage workers.

Example 2: A substantial number of studies carried out at the firm level indicate a clear link between profit sharing and productivity. There seems to be a much weaker relationship between productivity and other compensation and ownership arrangements (such as employee stock ownership plans), however. The private sector is paying close attention to this and other research on how workplace structure and organization affects productivity.

Example 3: Research on the impact of single-parent families shows that children from these families have substantially higher high school dropout rates and out-of-wedlock childbearing rates than children raised in two-parent families. The greater poverty and economic insecurity of single-parent families is the most important factor in accounting for these differences; the differing amount of time parents in different family structures spend with children is also important. This research has motivated growing interest in improved systems of child support collection from absent parents.

Example 4: An ongoing body of research has explored what matters about schools, classrooms, and teachers for student achievement. These studies indicate that children learn more in schools that are integrated into the community and have close connections with families, businesses and other community institutions. These studies have also shown that schools are more likely to improve children's educational outcomes if they target specific problems and encourage broad participation in the planning and implementation of reforms. This work has been widely cited in the ongoing discussion about school reform.

Example 5: Research has demonstrated that criminal events are disproportionately concentrated in certain neighborhoods and ecological places (such as taverns or parking lots.) This evidence on crime "hotspots", combined with other criminological research on the importance of informal social control in local communities for reducing crime, has led to major changes in recent police practice. Many cities are now implementing community policing strategies that stress the involvement of local residents and pay attention to the geography of the neighborhood and the location of crimes.

Example 6: The social sciences have defined and measured labor market discrimination by determining when pay and occupational differences exist that cannot be accounted for by measurable productivity differences or differences in qualifications. This research has been highly influential in determining the standards of statistical evidence the courts have used in employment discrimination cases.

IV. An Agenda for Future Research

This report identifies six areas of substantial research importance, where further work in the social and behavioral sciences promises significant returns. A more extended discussion of the research agenda in each of these areas is available in six attached appendices to this report. The research agenda in each of these areas has emerged from consultation with a broad group of social and behavioral scientists. This section summarizes some of the key issues for future research within each topical area.

1. Employing a Productive Workforce

If America is to remain competitive in the world economy, American workers must have the skills required to compete effectively. It is also essential that the strategic decisions of firms and the organization of the workplace be conducive to full utilization of workers' skills. Future research in this area can improve our understanding of how human behavior, group behavior, and organizational structure relate to employment and productivity. Such work can have a substantial effect on the private sector as it works to design and staff workplaces for the future that are productive and that support a reasonable quality of life for workers and their families. Appendix A lays out a more detailed future research agenda in this area, including investigation into such issues as:

Effective matching between workers and jobs. Effectively matching workers into jobs where they can best use their skills and talents is important in fostering productivity. For instance, the process by which new workers find jobs is only partially understood, and more should be known about the role of social networks, the provision of employment-related information in the schools, or the role of public training and placement efforts. Similarly, we need to know more about the ways in which older workers can most effectively find new work and/or train for new skills when displaced from their jobs.

Skill acquisition among workers. The acquisition of skills by workers is highly important in helping them move through a career and cope with changing skill demands in the workplace. More work needs to be done to understand how workers are motivated to acquire new skills, the changing nature of skill demands, and the types of programs that foster skill acquisition.

Effective organization of the workplace. The workplace takes inputs (human and physical capital) and transforms them into outputs. Vast changes in modern workplaces have raised a host of new issues about this process, however. Concern with the need for high-performance workplaces has made it imperative that we understand better how individual workers respond to incentives, and what type of management and organizational systems produce greater worker efforts and worker satisfaction.

2. Educating for the Future

Not all of America's youth are being adequately educated for the future, as indicated by the poor performance by U.S. students on standardized tests, high school drop out rates and extensive criticism of the public schools. Schools face increasingly difficult challenges in preparing a wide range of students to be productive and involved citizens. For instance, violence is a major concern inside many schools; growing population diversity means schools must cope with issues of multiculturalism, bilingualism, and racism; changes in family structure suggest that children are receiving less help and support at home for their school work. Appendix B lays out a more detailed future research agenda in this area, including investigation into such issues as:

Sustaining motivation among students to learn and perform well in school. Researchers have documented the importance of motivation for learning. There is evidence that both student and teacher motivation declines over time in the schools, however. We need to understand the nature of the activities that occur in the classroom, and how specific student/teacher, student/student, and student/curriculum interactions help or hinder learning. We also need to understand more about how school activities relate to other activities and events in children's lives, particularly family and peer influences.

Making educational systems more effective. While there is widespread agreement that our current public school system is not working as it should, there is little agreement about how to improve this situation. For instance, we need to understand more about the link between what is learned in school, the skills needed in work settings, and how those skills are acquired. High-quality evaluations of a number of new or proposed school reform efforts would provide better direction for future reforms. We also need good research on how school reforms can be most effectively implemented, and the nature of the barriers that hinder the adoption of new procedures within schools. Finally, we need to know more about how to nourish the intellectual and cognitive potential of our best students and how to maximize educational benefits of college and other post-high school training.

3. Fostering Successful Families

Families play a pivotal role in the creation of human capital. Families must be able to provide children and adolescents with the resources to become competent adults and productive citizens and (eventually) to be effective parents themselves. American families are undergoing radical changes, however, and there is concern that today's children are not being nurtured as effectively as in the past. More limited economic opportunities are putting new stresses on lower-income families, while the growing number of single-parent families at all income levels is creating a new set of challenges and potential problems for parents and children. Appendix C lays out a more detailed future research agenda in this area, including investigation into such issues as:

The new demography of families. While a vast amount of research has studied changes in the composition and behavior of American families, there is still much we do not understand about these changes. The causes of changing marital and fertility patterns are still only partly understood. Researchers are only in the beginning stages of understanding how increases in divorce, rising non-marital fertility, and other changes in family composition are affecting America's children.

The internal world of the family. One of the most important determinants of children's development is their intimate emotional and interaction patterns with other family members. We need to spend more time studying successful families, looking at how a child interacts with other family members as he or she goes through various maturation stages. Are there particular times or transitions when the quality of family interactions is especially crucial for healthy development? Why are some children more resilient to family problems than others? Continuing research about families that exhibit serious problems, such as sexual abuse and family violence, is also important in understanding how to help children and adults cope with and overcome these destructive experiences.

The value of social capital for human capital development. Families are imbedded in complex social relationships with other individuals, families, and institutions. A family's social capital is the set of resources and opportunities that exist through its relationship with other individuals and institutions. We need to understand the ways in which families create and maintain social networks with extended relatives and friends or use the resources of local community organizations. We also need to understand how these networks foster the development of skills among children and adults.

4. Building Strong Neighborhoods

Neighborhoods and the capital they contain (both social, physical, and human capital) strongly shape social networks and the daily activities of local residents. A neighborhood environment can facilitate or inhibit the life chances of its residents. As our society becomes increasingly urban and segregated by race, class, and income, the neighborhoods may be increasingly important in shaping the opportunities of their residents. Research on neighborhoods includes looking at the importance of social networks among geographically proximate adults and children, the role of neighborhood organizations and institutions on the lives of residents, the negative effects of crime, decaying housing, or gangs within a neighborhood, and the causes of local economic development. Appendix D lays out a more detailed future research agenda in this area, including investigation into such issues as:

Neighborhood change. Neighborhood change has typically been viewed as evolutionary, proceeding through specific stages. More expanded and multivariate models need to be developed, focusing on such issues as the rapid industrialization of previously rural communities, the role of financial and land development sectors in influencing neighborhood change, or the role of increasing ethnic diversity in neighborhood change.

Neighborhood social processes. We need to understand the processes that occur within the confines of the neighborhood, such as peer interactions, or street level social control exerted by gangs or by neighbors. We also need to understand the interaction between neighborhoods and their larger environment, such as population migration, diffusion of social norms and practices between areas, or the interaction between neighborhood institutions and larger economic and urban institutions. Neighborhood organizations. Neighborhood organizations are important in developing human capital among residents. We know too little about the long-term effects of the involvement by neighborhood residents in such activities as local political parties, youth centers, or religious institutions.

5. Reducing Disadvantage in a Diverse Society

America is and always has been a society of diverse peoples. Growing immigration has led to increases in diversity in recent years. Diversity has been linked to disadvantage as certain groups, identified by race or ethnicity, have long faced different economic opportunities and outcomes, limiting their contribution. To develop the human skills of all citizens of this country, we need to find ways to meet the social challenges that diversity represents. Appendix E lays out a more detailed future research agenda in this area, including investigation into such issues as:

The nature and consequences of diversity. The tendency to categorize people into groups is fundamental to the human species. We need to understand better how people categorize different ethnic, racial, and gender groups. Potential insight into policies that address the problems of diversity can emerge from research into how individual perceptions of social categories are changed, including the role of interpersonal contact, the expressed opinions of public leaders, and the role of the mass media.

Understanding group disadvantage and its effects. We know that groups differ in outcomes ranging from education, to income, to health status. While we are able to document the direct role of discrimination in producing disadvantage in some of these areas, we have had less success in understanding how discrimination and disadvantage overlap and reinforce each other. For instance, there is often a marked difference between what is judged discriminatory by different persons and groups. We need to better understand the persistence of behaviors that are categorized as discriminatory, as well as the development of perceptions of discrimination by disadvantaged groups. At the level of the individual, we need to understood why some persons are better able to cope with and overcome disadvantage and discrimination in their background, while others are blocked by it.

Economic and political influences on group disadvantage. Not all group outcome differences are due to current discrimination. The impact of past disadvantage and discrimination have left some groups more vulnerable to economic and social change. By better modelling and measuring the impact of economic change on more disadvantaged families, we can develop a clearer idea of how disadvantage is perpetuated. Similarly, we need to explore the differential impact of government policies designed to correct disadvantage on different groups.

6. Overcoming Poverty and Deprivation

Problems of poverty and deprivation have been remarkably stubborn in the United States. In 1992, 37 million Americans (14.5 percent of the population) lived in families whose income was below the U.S. poverty line. Other problems of deprivation, beyond income poverty, may be even more disturbing: growing homelessness, rising incarceration rates due to violence and drugs, or high illiteracy rates. Scientific research on poverty and deprivation has helped to better define and describe the causes of poverty and has been instrumental in both designing policies to combat poverty and in accurately evaluating their effectiveness. Appendix F lays out a more detailed future research agenda in this area, including investigation into such issues as:

Jobs and the changing economy. Real wages in low skilled jobs have fallen steadily, increasing concern about prospects for the working poor. We do not yet fully understand the causal forces behind these changes. Further research is needed to model and measure the effect of changes in international product and labor markets on less skilled U.S. workers. We also need to better understand the incentives that drive the working poor, as well as the barriers and disincentives that affect those who don't work. Such research could investigate how demographic changes in family structure relate to long-term trends in labor market participation by different gender and ethnic groups.

Families and poverty. Families serve as the primary social institution that nurtures children and prepares them for adulthood. Research indicates that family poverty negatively affects the cognitive and emotional development of children. Further research in this area could focus on the causes and consequences of the growing number of single mothers, particular those who are never married, where we know too little about the causes of teen pregnancy or how to prevent it. Similarly, we understand too little about family-level differences that produce wide differences in child-related outcomes among low-income families. Some children from poor families become effective and successful adults while others develop serious emotional and behavioral problems. More attention to the parenting strategies associated with resilient and effective children is necessary.

Institutions, policy and poverty. Individual behavior is shaped by government institutions and policies, such as education, criminal justice, transportation and political systems, as well as key government programs like social security, welfare, or tax systems. We need to learn more about the way in which programs designed to reduce poverty actually shape the lives of low-income families. Among other things, this includes attention to school effectiveness, to welfare and income transfer programs, and to criminal justice institutions and policies.

V. Data Needs

Our research on human capital issues is limited by the data available. There are several key areas where additional attention to data set design and collection could provide substantial scientific rewards.

The extension of longitudinal data sets. Over time, persons invest in skills, form families, and make employment decisions. While point-in-time data on individual behavior is useful, many of the human capital questions discussed in this report demand longitudinal data. Existing longitudinal data sets have vastly increased our knowledge of dynamic behavior. Their ongoing collection and extension is crucial. For instance, we are just beginning to have enough data within the Panel Survey of Income Dynamics to relate childhood family characteristics to the labor market outcomes of young adults 10 to 15 years later.

Collecting data from multiple sources with multiple perspectives. Research on human behavior is complex because human beings are affected by so many external forces. Much of our data focusses on limited aspects of human behavior. For example, economists tend to collect data on income and employment; sociologists focus on family and neighborhood environments; psychologists ask about mental and cognitive functioning. More data sets need to link information from multiple disciplinary perspectives. This may mean including economic and psychological measures on individual surveys, and linking this with external data on neighborhood and school characteristics, as well as the workplace where individuals are employed. Only with this sort of multiple-source and multiple-perspective information, can we effectively investigate the linkages between individuals and families, families and neighborhoods, and families and public or private institutions.

Embedded studies, that merge alternative forms of empirical analysis. Some of the most promising new empirical work in recent years has used multiple empirical techniques, administering large-scale individual surveys of employment and family behavior while also directing more intensive interview techniques to a subset of the survey population. For instance, researchers may use focus groups, psychological methods, or ethnographic work to gather more nuanced and complete individual information as a supplement to standard survey results.

VI. Methodological Needs

Methodological limitations also constraint research on human capital issues. Across the social and behavioral sciences, there is a need for greater development of our theoretical and analytical tool-kit to analyze key questions.

Analytical techniques for dynamic questions. Questions about dynamic behavior require complex modelling and empirical techniques, that estimate the effect of multiple events in a persons' past history on current behavior. While our understanding of time-dependent analysis has greatly increased over the past few years, there are still serious limits to what we can do. Expanded methodologies for dynamic modelling would provide much clearer answers to questions about sequential employment and promotion patterns, movements in and out of schooling and training among younger workers, or changes in family composition over time.

Models that link individual behavior to family and environmental characteristics. Providing better policy prescriptions from research on human capital issues requires better modeling of the simultaneous nature of the interactions between individuals and their families. It also requires the development of better models that link micro-level development and decision-making processes among individuals with the macro-level institutions and environments with which individuals interact.

Improved techniques for policy evaluation. There has been steady progress within the social and behavioral sciences improving the methodologies that are available to evaluate the effectiveness of political interventions. Further development in this area is necessary, however, as new work continually uncovers methodological difficulties with past evaluation strategies. The use of experimental random-assignment techniques to evaluate social programs has flourished in recent years, and further expansion of this methodology to new settings may produce substantial new knowledge. Yet, in many cases experimental evaluation is not possible; much developmental work remains to be done to provide a base of knowledge about how to effectively evaluate policies when random assignment is not possible.

VII. Organizing a Research Strategy on Human Capital

A coordinated strategy for major new research on human capital issues will necessarily have many components.

Individual research projects within disciplines. The core of any research initiative is top quality scholars with the interest and background to conduct useful research on human-capital related questions out of their disciplinary perspective. Funding individual research projects by one or a small group of within-discipline collaborators is central to encouraging scholars to become engaged in human capital-related research.

Research centers or research networks. While much good work is done by scholars working on their own, it is often useful to fund groups of scholars who may not be collaborating on single projects, but whose work and research interests overlap. Any such funding should be explicitly designed to include researchers from a variety of disciplinary perspectives. While this traditionally means providing funds to a university which then serves as the geographic location for a research center, those involved in these centers should include researchers from other locations as well.

Graduate training programs. Attracting the best young scholars into active research on human capital questions throughout the social and behavioral sciences is the best way of encouraging long-term scientific interest in this topic. Some of this occurs when students are hired to work as research assistants for senior scholars funded through the initiative. There may also be a role for graduate training programs aimed at attracting and training young scholars, such as the one currently funded by the NSF on race and urban poverty issues. Run jointly by two universities, it is designed to supplement the disciplinary training of graduate students in the social sciences.

Data collection efforts. In addition to specific research projects, building the tool-kit of scientists through improved data is important. Section V of this report lists some key data needs with regard to human capital research. Any research strategy should involve expanded data collection efforts, with priority to data that can be useful in a broad range of research questions.

Multi-disciplinary coordination. Any research strategy should explicitly work to expand conversations and research networks across scholars working on similar problems from different disciplinary perspectives. This will provide opportunities to share results, to talk about different theoretical and methodological perspectives, and encourage future collaboration.

Dissemination of research results in the policy community. One of the primary reasons to undertake the human capital initiative is its close connection to key policy concerns. Any research strategy should promote the dissemination of research results within public forums, help establish networks and conversations between policy-analysts, policy-makers and researchers, and find ways to assure that the policy world is aware of scientific advances with regard to our understanding of human capital issues.

VIII. Prospects for Success in the Human Capital Initiative

There are a variety of reasons to believe that this is an extremely promising time to launch a major research agenda on human capital issues. In particular, the research community is better prepared than ever before to effectively undertake such an initiative and the policy community is better prepared to effectively utilize the results of the new research findings such an initiative would generate.

There is rising social concern with these problems. Recent years have seen a resurgence of attention to issues of stagnant productivity, inadequate worker skills, and related social problems of families, schools and neighborhoods. Both growing concern with economic competition from abroad and rising awareness of social problems in this country has fueled an expanded public discussion of the problems of inadequate skills and underutilized (or misutilized) human resources in America.

Policy-makers are increasingly consulting with the social and behavioral research community in their work. The social and behavioral sciences are more closely involved with the policy community than ever before. In part, wanting to know which policies have worked and which have not, the policy world has turned to the scientific community to design and implement evaluation studies. In part, this is due to the growing number of persons in policy-related positions who have training in the social and behavioral sciences due to the growing popularity of masters degrees in public policy analysis. Finally, stronger connections between the scientific and the policy world reflect the emergence of a number of applied policy research and advocacy organizations, who disseminate research findings and link researchers with policy analysts.

There is rising interest in the research community about these topics. The number of social and behavioral scientists working on human-capital related topics has grown in the social and behavioral sciences. In part, this is because rising social interest in these problems has fueled a rise in scientific interest. In addition, the availability of new data sets and new research questions relating to human resources and human capital has produced research on the cutting edge of theoretical and empirical analysis in a number of disciplines. This in turn has attracted younger scholars into the field.

There is rising interest in coordinated and multi-disciplinary conversations on these topics. Over the past several years, a variety of multi-disciplinary groups have been formed to work on some of these issues. For instance, the Social Science Research Council brought together a broad group of social and behavioral scientists to study extremely poor urban ghetto neighborhoods in the late 1980s, generating a series of new research studies and data collection projects. These projects have created research networks among scholars in different disciplines interested in human capital questions and increased the general interest throughout the research community in such shared conversations.

IX. Conclusion

This report proposes a research strategy to launch the human capital initiative within the National Science Foundation. The NSF is particularly well positioned to coordinate this effort, with the establishment of the new Division of Social, Behavioral, and Economic Research. The impetus for this initiative comes out of growing social concern over this nation's inadequate utilization and development of the human capital of its citizens, and the awareness that better use of our human resources is necessary to maintain the long-term economic strength and social health of this country. Past research in this area has been used extensively in the design of policy and in the public understanding of these issues. Further research, particularly a major coordinated research effort that engages top quality scientists in a wide variety of questions relating to the development of human skills and human resources, promises large future rewards. A research agenda in six key topical areas is developed in this report, along with proposed directions for the organization and implementation of the research strategy. To be successful, such an initiative will require expanded resources. If successfully implemented, however, this research strategy can help further the development and effective utilization of America's human resources.

Appendix A: Employing a Productive Workforce
Appendix B: Educating for the Future
Appendix C: Fostering Successful Families
Appendix D: Building Strong Neighborhoods
Appendix E: Reducing Disadvantage in a Diverse Society
Appendix F: Overcoming Poverty and Deprivation




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