IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/1996-13.html
   My bibliography  Save this paper

Do Low Human Capital Coefficients Make Sense? A Puzzle and Some Answers

Author

Abstract

I develop a new measure of human capital stock that has two advantages over previous measures. First, it allows for varying costs of education across time, countries, and level of education. Second, the unit of measurement is dollars, which allows comparison of human capital stocks with other macro- economic variables, including national income (GDP) and physical capital stocks. Using cross-country panel regression analysis, I find that human capital accumulation accounts for a relatively small (about ten percent) of per-capita GDP growth. I further find that, unlike physical capital, the stock of human capital as a share of GDP increases with GDP.

Suggested Citation

  • Ruth A. Judson, "undated". "Do Low Human Capital Coefficients Make Sense? A Puzzle and Some Answers," Finance and Economics Discussion Series 1996-13, Board of Governors of the Federal Reserve System (U.S.), revised 04 Dec 2019.
    • Handle: RePEc:fip:fedgfe:1996-13
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/feds/1996/199613/199613pap.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 74-103, Part II, .
    3. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    4. Fallon, P R & Layard, P R G, 1975. "Capital-Skill Complementarity, Income Distribution, and Output Accounting," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 279-301, April.
    5. Alain Mingat & Jee-Peng Tan, 1985. "On Equity in Education Again: An International Comparison," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 298-308.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Birdsall, Nancy & Behrman, Jere R, 1984. "Does Geographical Aggregation Cause Overestimates of the Returns to Schooling?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 46(1), pages 55-72, February.
    8. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    9. George Psacharopoulos & Richard Layard, 1979. "Human Capital and Earnings: British Evidence and a Critique," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 485-503.
    10. Lau, Lawrence J. & Jamison, Dean T. & Louat, Frederic F., 1991. "Education and productivity in developing countries : an aggregate production function approach," Policy Research Working Paper Series 612, The World Bank.
    11. Christopher Dougherty & George Psacharopoulos, 1977. "Measuring the Cost of Misallocation of Investment in Education," Journal of Human Resources, University of Wisconsin Press, vol. 12(4), pages 446-459.
    12. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    13. Psacharopoulos, George & Ying Chu Ng, 1992. "Earnings and education in Latin America : assessing priorities for schooling investments," Policy Research Working Paper Series 1056, The World Bank.
    14. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    15. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    16. N. Gregory Mankiw & David Romer & David Weil, 1990. "A Contribution to the Empirics of Economic Growth," Working Papers 1990-24, Brown University, Department of Economics.
    17. Behrman, Jere R & Birdsall, Nancy, 1983. "The Quality of Schooling: Quantity Alone is Misleading," American Economic Review, American Economic Association, vol. 73(5), pages 928-946, December.
    18. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    19. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1993. "A new database on human capital stock : sources, methodology and results," Policy Research Working Paper Series 1124, The World Bank.
    20. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    21. Hause, John C, 1972. "Earnings Profile: Ability and Schooling," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 108-138, Part II, .
    22. Pinera, Sebastian & Selowsky, Marcelo, 1981. "The optimal ability-education mix and the misallocation of resources within education magnitude for developing countries," Journal of Development Economics, Elsevier, vol. 8(1), pages 111-131, February.
    23. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 501-526.
    24. Benhabib, Jess & Spiegel, Mark M., 1991. "Growth Accounting with Physical and Human Capital Accumulation," Working Papers 91-66, C.V. Starr Center for Applied Economics, New York University.
    25. Winkler, D.R., 1990. "Higher Education In Latin America: Issues Of Efficiency And Equity," World Bank - Discussion Papers 77, World Bank.
    26. John W. Kendrick, 1976. "The Formation and Stocks of Total Capital," NBER Books, National Bureau of Economic Research, Inc, number kend76-1, March.
    27. Romer, Paul M., 1990. "Human capital and growth: Theory and evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 32(1), pages 251-286, January.
    28. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    29. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Risti Permani, 2009. "The Role of Education in Economic Growth in East Asia: a survey," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 23(1), pages 1-20, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruth A. Judson, 1996. "Do low human capital coefficients make sense? A puzzle and some answers," Finance and Economics Discussion Series 96-13, Board of Governors of the Federal Reserve System (U.S.).
    2. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Les OXxley & Ttrinh Le & John Gibson, 2008. "Measuring Human Capital: Alternative Methods and International Evidence," Korean Economic Review, Korean Economic Association, vol. 24, pages 283-344.
    4. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
    5. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 607-668, September.
    6. Wößmann, Ludger, 2000. "Specifying Human Capital: A Review, Some Extensions, and Development Effects," Kiel Working Papers 1007, Kiel Institute for the World Economy (IfW Kiel).
    7. Trinh Le & John Gibson & Les Oxley, 2005. "Measures of human capital: A review of the literature," Treasury Working Paper Series 05/10, New Zealand Treasury.
    8. Alan B. Krueger & Mikael Lindahl, 1998. "Education for Growth in Sweden and the World," Working Papers 790, Princeton University, Department of Economics, Industrial Relations Section..
    9. Byoung Uk Kang & Jin-Mo Kim & Oded Palmon & Zhaodong Zhong, 2020. "Are college education and job experience complements or substitutes? Evidence from hedge fund portfolio performance," Review of Quantitative Finance and Accounting, Springer, vol. 54(4), pages 1247-1278, May.
    10. Wei-Bin Zhang, 2015. "National Education and Global Economic Growth: A Synthesis of the Uzawa–Lucas Two-Sector and the Oniki–Uzawa Trade Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 905-928, December.
    11. Ludger Wößmann, 2003. "Specifying Human Capital," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 239-270, July.
    12. Alla Kirova, 2011. "Evolution of the Human Capital Doctrine," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 94-131.
    13. Amaghouss, Jabrane & Ibourk, Aomar, 2019. "Higher Education and Economic Growth: A Comparative Analysis of World Regions Trajectories," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(3), pages 321-350.
    14. Zhang, Xiaobei & Wang, Xiaojun, 2021. "Measures of human capital and the mechanics of economic growth," China Economic Review, Elsevier, vol. 68(C).
    15. Sofia Cheidvasser, 2000. "The Educated Russian's Curse: Returns to Education in the Russian Federation," Econometric Society World Congress 2000 Contributed Papers 0246, Econometric Society.
    16. Manuel Salas Velasco, 2004. "Rendimientos privados de las inversiones en educación superior a partir de ecuaciones de ingresos," Hacienda Pública Española / Review of Public Economics, IEF, vol. 169(2), pages 87-117, June.
    17. Martin Werding & Sonja Munz & Vera Gács, 2008. "Fertility and prosperity : links between demography and economic growth," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 42.
    18. Erich Gundlach, 1997. "Human capital and economic development: A macroeconomic assessment," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 32(1), pages 23-35, January.
    19. Antonio Caparrós Ruiz & Lucía Navarro Gómez & Mario Rueda Narváez, 2010. "Endogenous wage determinants and returns to education in Spain," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(4), pages 410-425, July.
    20. Abdul Shaban & Shahbaz Khan, 2023. "Cultural diversity, human capital, and regional economic growth in India," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(5), pages 973-991, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:1996-13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.