Measuring Human Capital in Japan

This study estimates human capital in Japan from the time of its high economic growth to recent years. The accumulation of human capital due to the dissemination of education is an important factor of economic growth. In Japan, too, the expansion of compulsory education and a rise in the high-school and university enrollment rates after WWII are presumed to have contributed to economic growth in the postwar period. In addition, estimating the current status of human capital has made it possible to evaluate the extent to which future expansion of education will contribute to economic growth. In this study, we measure distributions of years of schooling for each generation since the pre-war period and estimate the years of schooling of workers by combining the measured years of schooling of the population with the statistics of workers categorized by education in the postwar period. Then, we convert the estimated years of schooling into human capital through a non-linear Mincer-type wage function, and identify the contribution to economic growth using growth accounting. As a result, it is found that in the period of high economic growth in particular, an increase in human capital made significant contributions to economic growth. A similar analysis concerning the non-agricultural sector shows that human capital contributed to economic growth in that sector as in the entire economy. On the other hand, it is found that the effects of the future dissemination of education will be limited, because the years of schooling have already risen to a high level.