Finance and Economics Discussion Series (FEDS)
July 1997
Do Low Human Capital Coefficients Make Sense? A Puzzle and Some Answers
Abstract:
In this paper, I develop a new measure of human capital stock that has two advantages over previous measures. First, it allows for the fact that the cost of education varies across time, countries, and levels. Second, the unit of measurement is dollars, which allows comparison of human capital stocks with other macroeconomic 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.
Full paper (1413 KB Postscript)Keywords: Growth, human capital, panel data
PDF: Full Paper
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