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The measurement of human capital as the input associated with the labour force is a crucial factor in the process of economic growth and development. Without good measures, models in this area cannot be estimated and tested empirically. In Discussion Paper No. 1146, Casey Mulligan and Research Fellow Xavier Sala-i-Martin propose a new methodology for the construction of human capital stocks as well as a set of estimates of such stocks for the states of the US for each census year from 1940. Along with these latest human capital estimates, a new methodology for the construction of appropriate index numbers is presented which allows for cross-sectional as well as time-series comparisons. These index numbers are optimal in the sense that they minimize a function of the expected error made when human capital indices are compared across economies. The main findings are that the US stock of human capital grew twice as rapidly as the average time of schooling (which is usually taken as a proxy for the stock of human capital in the new growth literature), and that the dispersion of the stock of human capital across the US increased during the 1980s while the dispersion of the average years of schooling decreased during the same period. A Labour-Income Based Measure of the Value of Human Capital: An Application to the States of the United States Casey B Mulligan and Xavier Sala-i-Martin Discussion Paper No. 1146, March 1995 (IM) |
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