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Measuring the stock of human capital in New Zealand

  • Van Trinh, Le Thi
  • Gibson, John
  • Oxley, Les

Human capital is increasingly believed to play an important role in the growth process; however, adequately measuring its stock remains controversial. Because the estimated impact that human capital has on economic growth is sensitive to the measures or proxies of human capital, accurate and consistent measures of human capital are needed. While many measures of human capital have been developed, most rely on some crude proxy of educational experience and are thus plagued with limitations. In this study, we adopt the lifetime labour income approach outlined by Jorgenson and Fraumeni [D.W. Jorgenson, B.M. Fraumeni, The accumulation of human and non-human capital, 1948–1984, in: R.E. Lipsey, H.S. Tice, The Measurement of Savings, Investment and Wealth, The University of Chicago Press, Chicago, IL, 1989, pp. 227–282; D.W. Jorgenson, B.M. Fraumeni, The output of the education sector, in: Z. Griliches (Ed.), Output Measurement in the Services Sector, The University of Chicago Press, Chicago, IL, 1992, pp. 303–338] to measure the monetary value of the stock of human capital for New Zealand. Jorgenson and Fraumeni's method is innovative in that it simplifies the estimation process, as well as taking into account the potential value of current schooling in addition to that of past schooling. Based on data from the New Zealand Census of Population, we find that the human capital stock of the country's employed work force grew by half between 1981 and 2001, mostly due to the rise in employment level.

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Article provided by Elsevier in its journal Mathematics and Computers in Simulation (MATCOM).

Volume (Year): 68 (2005)
Issue (Month): 5 ()
Pages: 484-497

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Handle: RePEc:eee:matcom:v:68:y:2005:i:5:p:484-497
DOI: 10.1016/j.matcom.2005.02.007
Contact details of provider: Web page: http://www.journals.elsevier.com/mathematics-and-computers-in-simulation/

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  1. Jonathan Temple, 2003. "Growth effects of education and social capital in the OECD countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 57-101.
  2. Larry E. Jones & Rodolfo Manuelli, 1990. "A Convex Model of Equilibrium Growth," NBER Working Papers 3241, National Bureau of Economic Research, Inc.
  3. Dale W. Jorgenson & Barbara M. Fraumeni, 1992. "The Output of the Education Sector," NBER Chapters, in: Output Measurement in the Service Sectors, pages 303-341 National Bureau of Economic Research, Inc.
  4. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
  5. Dale Jorgenson & Barbara M. Fraumeni, 1989. "The Accumulation of Human and Nonhuman Capital, 1948-84," NBER Chapters, in: The Measurement of Saving, Investment, and Wealth, pages 227-286 National Bureau of Economic Research, Inc.
  6. Kerry Papps, 2001. "Investigating a Wage Curve for New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 35(2), pages 218-239.
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  8. Burton A. Weisbrod, 1961. "The Valuation of Human Capital," Journal of Political Economy, University of Chicago Press, vol. 69, pages 425.
  9. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  10. Ahlroth, Sofia & Bjorklund, Anders & Forslund, Anders, 1997. "The Output of the Swedish Education Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(1), pages 89-104, March.
  11. Dagum, Camilo & Slottje, Daniel J., 2000. "A new method to estimate the level and distribution of household human capital with application," Structural Change and Economic Dynamics, Elsevier, vol. 11(1-2), pages 67-94, July.
  12. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
  13. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
  14. Graham, John W & Webb, Roy H, 1979. "Stocks and Depreciation of Human Capital: New Evidence from a Present-Value Perspective," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(2), pages 209-24, June.
  15. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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