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Flows of human capital in the Nordic countries 1988-1998

  • Published 03/03/2003
  • Last updated 20/05/2011
Competence is a key ingredient for innovation and growth. The prosperity of a nation depends on the knowledge, skills and experience that can be put to work in the operation and development of its economic and social life. Research, education of the young, and lifelong learning are being heralded as crucial mechanisms for supplying businesses and the public sector alike with new and updated competence.

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The project “Flows of human capital in the Nordic countries” is a small and exploratory step in the quest for understanding the competence aspect of mobility. The project has set out to illuminate issues of

  • human capital flows or circulation through the inter-Nordic labour market

  • benchmarks and stylised facts of mobility in the Nordic countries (with a particular emphasis on the significance of the business cycle)

  • science – industry mobility

All while identifying and addressing the challenges of opening new, large national register databases to international comparative research.

 

The project was inspired by the Nordic co-operation in the OECD work on National Innovation Systems in the so-called “Focus Group on Human Mobility” in 1997-1998. Research issues of high policy relevance that were addressed included a better understanding of flows of competence embedded in employees changing jobs. The science-industry relation was a particularly hot topic in this respect. The OECD work was in turn based on the newly available “employment files”, i.e. matched employer-employee data produced by combining public register databases. These employment files are constructed in different ways in different countries, but all of them contain a common core of data about all individuals in the population above 16 years, the “active population”.

 

Until recently it was only the four largest Nordic countries that had such employment files available to researchers and statisticians, but recently Belgium has constructed the first time series of this kind using information from the social security system. In most OECD countries the information exists that would make it possible to construct employment files, but different statistical, legal and political traditions have so far blocked the development of such data sets. 

 

The use of these register data for research purposes is still in an early, explorative phase. Because of this, some caveats are in order for interpreting the results. Firstly, the different mechanisms of knowledge transfer definitely complement each other and they probably also interact. Ideally, mobility rates should be seen in conjunction with measures of research, education and lifelong learning. This has not been possible in the present project.

 

Secondly, the human capital aspect is not the only aspect of mobility. High mobility increases personnel turnover costs for the firms involved. It disrupts teamwork, makes knowledge accumulation difficult, takes key personnel out of projects that are not finished etc. Low mobility might lead to too little circulation of both experience and new ideas and approaches, incurring high opportunity costs. It is therefore of interest to search for optimal ranges of mobility rates rather than to strive for extreme values. Mobility rates below 5 per cent may indicate stagnation and when they get above 25 per cent, things may seem a bit hectic. Even so, we are not in the position to identify a canonical range.

 

Our hope is that the results from this project will contribute to the development of research and policy on issues related to stocks and flows of human capital and related labour market issues.