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Human Capital Index (HCI) - From Uncertainty to Robustness of Comparisons

Author

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  • Touhami Abdelkhalek
  • Dorothee Boccanfuso

Abstract

In 2019, the World Bank adopted an index developed by Kraay (2018), the Human Capital Index (HCI)(WB, 2019). It combines demographic, education, and health dimensions on a complementary statistical and econometric basis. It is used by the World Bank in the area of human development for monitoring and comparison purposes, in time and space. By construction, the HCI is subject to statistical and econometric uncertainties that are not adequately captured by comparisons and are therefore, not robust. In this paper, we propose a systematic approach taking into account these simultaneous uncertainties using a projection method. We present its practical implementation to construct confidence intervals to the HCI that reflect these uncertainties. It appears that if confidence intervals overlap for two countries or for the same country over time, then comparisons would be inconclusive regardless of the ponctual estimates.

Suggested Citation

  • Touhami Abdelkhalek & Dorothee Boccanfuso, 2021. "Human Capital Index (HCI) - From Uncertainty to Robustness of Comparisons," Working Papers 6, Africa Institute for Research in Economics and Social Sciences.
    • Handle: RePEc:aof:wpaper:wp-0006
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    References listed on IDEAS

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    1. Patrinos,Harry Anthony & Angrist,Noam, 2018. "Global Dataset on Education Quality : A Review and Update (2000-2017)," Policy Research Working Paper Series 8592, The World Bank.
    2. Matthew Collin & David N. Weil, 2020. "The Effect of Increasing Human Capital Investment on Economic Growth and Poverty: A Simulation Exercise," Journal of Human Capital, University of Chicago Press, vol. 14(1), pages 43-83.
    3. Pasquini, Alessandra & Rosati, Furio C., 2020. "A Human Capital Index for the Italian Provinces," IZA Discussion Papers 13301, Institute of Labor Economics (IZA).
    4. Angrist, Noam & Djankov, Simeon & Goldberg, Pinelopi & Patrinos, Harry, 2019. "Measuring human capital," LSE Research Online Documents on Economics 118907, London School of Economics and Political Science, LSE Library.
    5. Touhami Abdelkhalek & Jean-Marie Dufour, 1998. "Statistical Inference For Computable General Equilibrium Models, With Application To A Model Of The Moroccan Economy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 520-534, November.
    6. Kraay,Aart C., 2018. "Methodology for a World Bank Human Capital Index," Policy Research Working Paper Series 8593, The World Bank.
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    Keywords

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    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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