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

Author

Listed:
  • Touhami Abdelkhalek

    (Institut National de Statistique et d'Economie Appliquee)

  • Dorothee Boccanfuso

    (Universite Mohammed VI Polytechnique)

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 1462, Economic Research Forum, revised 20 Feb 2021.
    • Handle: RePEc:erg:wpaper:1462
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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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