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Do low human capital coefficients make sense? A puzzle and some answers

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  • Ruth Judson
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    Abstract

    I develop a new measure of human capital stock that has two advantages over previous measures. First, it allows for varying costs of education across time, countries, and level of education. Second, the unit of measurement is dollars, which allows comparison of human capital stocks with other macro- economic variables, including national income (GDP) and physical capital stocks. Using cross-country panel regression analysis, I find that human capital accumulation accounts for a relatively small (about ten percent) of per-capita GDP growth. I further find that, unlike physical capital, the stock of human capital as a share of GDP increases with GDP.

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    File URL: http://www.federalreserve.gov/pubs/feds/1996/199613/199613abs.html
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    Bibliographic Info

    Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 96-13.

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    Date of creation: 1996
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    Handle: RePEc:fip:fedgfe:96-13

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    Keywords: Human capital;

    References

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    1. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1993. "A new database on human capital stock : sources, methodology and results," Policy Research Working Paper Series 1124, The World Bank.
    2. Lau, Lawrence J. & Jamison, Dean T. & Louat, Frederic F., 1991. "Education and productivity in developing countries : an aggregate production function approach," Policy Research Working Paper Series 612, The World Bank.
    3. Birdsall, Nancy & Behrman, Jere R, 1984. "Does Geographical Aggregation Cause Overestimates of the Returns to Schooling?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 46(1), pages 55-72, February.
    4. Winkler, D.R., 1990. "Higher Education In Latin America: Issues Of Efficiency And Equity," World Bank - Discussion Papers 77, World Bank.
    5. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
    7. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
    8. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
    9. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
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    12. Pinera, Sebastian & Selowsky, Marcelo, 1981. "The optimal ability-education mix and the misallocation of resources within education magnitude for developing countries," Journal of Development Economics, Elsevier, vol. 8(1), pages 111-131, February.
    13. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    14. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
    15. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
    16. Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S74-S103, Part II, .
    17. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    18. Hause, John C, 1972. "Earnings Profile: Ability and Schooling," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S108-S38, Part II, .
    19. Alain Mingat & Jee-Peng Tan, 1985. "On Equity in Education Again: An International Comparison," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 298-308.
    20. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
    21. Fallon, P R & Layard, P R G, 1975. "Capital-Skill Complementarity, Income Distribution, and Output Accounting," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 279-301, April.
    22. Psacharopoulos, George & Layard, Richard, 1979. "Human Capital and Earnings: British Evidence and a Critique," Review of Economic Studies, Wiley Blackwell, vol. 46(3), pages 485-503, July.
    23. Paul M. Romer, 1989. "Human Capital And Growth: Theory and Evidence," NBER Working Papers 3173, National Bureau of Economic Research, Inc.
    24. Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S37-64, October.
    25. Psacharopoulos, George & Ying Chu Ng, 1992. "Earnings and education in Latin America : assessing priorities for schooling investments," Policy Research Working Paper Series 1056, The World Bank.
    26. John W. Kendrick, 1976. "The Formation and Stocks of Total Capital," NBER Books, National Bureau of Economic Research, Inc, number kend76-1, July.
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    Cited by:
    1. Self, Sharmistha & Grabowski, Richard, 2004. "Does education at all levels cause growth? India, a case study," Economics of Education Review, Elsevier, vol. 23(1), pages 47-55, February.
    2. Simón Sosvilla-Rivero & Javier Alonso Meseguer, . "El efecto del capital humano sobre el crecimiento: ¿ Importa el periodo muestral?," Working Papers 2003-22, FEDEA.
    3. Simón Sosvilla-Rivero & Javier Alonso Meseguer, . "Estimación de una función de producción MRW para la Economía Española, 1910-1995," Studies on the Spanish Economy 197, FEDEA.

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