Human Capital Development

Date: October 2010
Type: Papers and Briefs
Subject:
Series: Economics Working Papers
ISSN: 1655-5252 (print)
Author: Son, Hyun H.

Description

This paper has two main objectives. First, it assesses and measures the gaps in the stock of human capital across the world. It presents how effectively different regions are improving their stock of human capital, and how long it will take for developing countries to catch up with the current level of human capital in industrialized countries. Second, it revisits the contribution of human capital to economic growth, proposing a decomposition method to account for employment growth-which is also impacted on by human capital growth-in explaining growth in total output per worker. The proposed methodology introduces employment growth in the growth decomposition through the employment growth elasticity. It is conjectured that as human capital increases, employment growth elasticity will decrease, making the economy less labor-intensive, resulting in higher economic growth. The proposed method points to the importance of the micro linkage between human capital and the labor market.

Contents

  • Abstract
  • Introduction
  • What is Human Capital?
  • The Stock of Human Capital in the World
  • Can Developing Countries Catch Up with Industrialized Countries in Increasing Human Capital?
  • Human Capital and Economic Growth
  • Social and Private Returns to Education
  • Human Capital and the Labor Market
  • Education Policy: Basic Skills versus Highly Skilled Labor
  • Summary and Policy Recommendations
  • Appendix: Growth Accounting Methodology
  • References