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The Market Value Of Human Capital: An Empirical Analysis



    () (Universitatea de Vest †Vasile Goldis†Arad, Facultatea de Stiinte Economice)


There is a general consensus that human capital is a major determinant of economic growth. Reflections on how human capital is related to growth can be extended by viewing on the market value of the human capital. The concept of the market value of human capital reflects the efficiency of allocation and utilisation of the human capital in the economy. To measure this efficiency the concept of the market value of human capital is explained and developed in the present paper. The aim of the paper is to introduce the concept of market value of human capital and the specific objectives are targeted to define his content, to propose a method for estimating it and to provide calculations of it for OECD countries.The concept of human capital is complex and multifaceted one, consisting of: native human capital (biological), educational capital, health capital and social skills (Neagu, 2010). Clearly, human capital is intangible, a stock that is not directly observable as physical capital. Therefore, the estimation of human capital must be constructed indirectly. The stock of human capital in economy creates economic value, expressed through the economic output per capita. In order to estimate this economic value we have to find an appropriate proxy for the human capital stock producing that value. In the purpose of our paper, we consider that the economic value of human capital can be estimated by calculating the aggregate value created by the active human capital in the economy. In this view, GDP per person employed is a relevant estimation of value created by the employed labour force. The aggregate value is created by the employed persons with different educational level. The market value of human capital is calculated by dividing the GDP per person employed to the human capital stocks active in the economy. The human capital stock depends on educational costs ( on primary, seconadry, tertiary education) as a the share of GDP per capita weighted by the employment rates. For OECD countries, the market value of their human capital was calculated for 1999-2008, showing their efficiency on utilisation of the human capital stock. The most efficient OECD countries are Australia Austria and USA and the less efficient are Mexico, Czech Republic and Hungary.The market value of human capital has a ascending trend in all OECD countries, reflecting the results of their efforts to valorise their human capital in employment.The originality of the paper consists on introduction the concept of the market value of the human capital, defining his content and providing estimates for OECD countries.As a concept, the market value of human capital of a country shows the ability of the economy to use the existent human capital to produce economic output. The market value of human capital reflects an aspect of the economic efficiency, by relating the economic output per person employed to the human capital per capita employed in the economy. It expresses the economic output per one unit of human capital, reflecting the aggregate perfomance of that economy.

Suggested Citation

  • Neagu Olimpia, 2012. "The Market Value Of Human Capital: An Empirical Analysis," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 256-264, December.
  • Handle: RePEc:ora:journl:v:1:y:2012:i:2:p:256-264

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    References listed on IDEAS

    1. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    2. 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 218-223, May.
    3. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1995. "A new database on human capital stock in developing and industrial countries: Sources, methodology, and results," Journal of Development Economics, Elsevier, vol. 46(2), pages 379-401, April.
    4. Richard Jones & Blessing Chiripanhura, 2010. "Measuring the UK's human capital stock," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 4(11), pages 36-63, November.
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    Cited by:

    1. Kokotovic, Filip, 2016. "A Panel Regression Analysis Of Human Capital Relevance In Selected Scandinavian And Se European Countries," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(1), pages 13-24.

    More about this item


    human capital; market value of human capital; employment; education costs;

    JEL classification:

    • J - Labor and Demographic Economics
    • J - Labor and Demographic Economics
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I - Health, Education, and Welfare


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