IDEAS home Printed from https://ideas.repec.org/a/nse/ecosta/ecostat_2020_517t_5.html
   My bibliography  Save this article

Why and How Should Human Capital be Measured in National Accounts?

Author

Listed:
  • Nicolas Canry

Abstract

[eng] There is currently a significant divergence in the way in which education expenditure is perceived in economic theory and in national accounting: the former treats it as investment, the latter as consumption. In fact, the accounting framework is still structured around two major production factors (labour and physical capital), whereas human capital appears to be essential if certain current phenomena are to be perceived accurately, notably the resurgence of inequality in certain countries. This paper presents the work undertaken to incorporate human capital into national accounts and explores the two main methods used: that based on costs (inputs) and that based on income (output). We go on to use the inputs method to estimate the savings rate of USA, French and British households when education and health expenditure is transferred to investment. Only the inclusion of health expenditure would enable the USA savings rate to be redressed significantly.

Suggested Citation

  • Nicolas Canry, 2020. "Why and How Should Human Capital be Measured in National Accounts?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 61-79.
    • Handle: RePEc:nse:ecosta:ecostat_2020_517t_5
    DOI: https://doi.org/10.24187/ecostat.2020.517t.2023
    as

    Download full text from publisher

    File URL: https://insee.fr/en/statistiques/fichier/4770152/05-ES_517-518-519_Canry_ENWeb.pdf
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.24187/ecostat.2020.517t.2023?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    2. François Bourguignon, 2015. "The Globalization of Inequality," Economics Books, Princeton University Press, edition 1, number 10433.
    3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    6. Verdugo, Gregory, 2014. "The great compression of the French wage structure, 1969–2008," Labour Economics, Elsevier, vol. 28(C), pages 131-144.
    7. Michael S. Christian, 2017. "Net Investment and Stocks of Human Capital in the United States, 1975-2013," International Productivity Monitor, Centre for the Study of Living Standards, vol. 33, pages 128-149, Fall.
    8. 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.
    9. Bostic, Raphael & Gabriel, Stuart & Painter, Gary, 2009. "Housing wealth, financial wealth, and consumption: New evidence from micro data," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 79-89, January.
    10. Dale W. Jorgenson & J. Steven Landefeld & Paul Schreyer, 2014. "Measuring Economic Sustainability and Progress," NBER Books, National Bureau of Economic Research, Inc, number jorg12-1.
    11. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    12. Theodore W. Schultz, 1962. "Reflections on Investment in Man," NBER Chapters, in: Investment in Human Beings, pages 1-8, National Bureau of Economic Research, Inc.
    13. Wulong Gu & Ambrose Wong, 2015. "Productivity and economic output of the education sector," Journal of Productivity Analysis, Springer, vol. 43(2), pages 165-182, April.
    14. Thomas Lemieux, 2008. "The changing nature of wage inequality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(1), pages 21-48, January.
    15. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 1-34.
    16. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 367-397.
    17. Daron Acemoglu, 2002. "Directed Technical Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 781-809.
    18. John W. Kendrick, 1976. "Total Capital and Economic Growth," NBER Chapters, in: The Formation and Stocks of Total Capital, pages 111-125, National Bureau of Economic Research, Inc.
    19. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 749-775.
    20. Michael S. Christian, 2016. "Net Investment and Stocks of Human Capital in the United States, 1975-2013," BEA Working Papers 0131, Bureau of Economic Analysis.
    21. Barbara M. Fraumeni, 2011. "Human Capital Accounts: Choice of Rates and Construction of Volume Indices," NBER Working Papers 16895, National Bureau of Economic Research, Inc.
    22. John W. Kendrick, 1976. "The Formation and Stocks of Total Capital," NBER Books, National Bureau of Economic Research, Inc, number kend76-1.
    23. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 977-1023.
    24. Dale Jorgenson & Barbara M. Fraumeni, 1989. "The Accumulation of Human and Nonhuman Capital, 1948-84," NBER Chapters, in: The Measurement of Saving, Investment, and Wealth, pages 227-286, National Bureau of Economic Research, Inc.
    25. Massimo Guidolin & Elizabeth A. La Jeunesse, 2007. "The decline in the U.S. personal saving rate: is it real and is it a puzzle?," Review, Federal Reserve Bank of St. Louis, vol. 89(Nov), pages 491-514.
    26. Marianne Bertrand & Sendhil Mullainathan, 2001. "Are CEOs Rewarded for Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 901-932.
    27. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    28. Aldo Barba & Massimo Pivetti, 2009. "Rising household debt: Its causes and macroeconomic implications--a long-period analysis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(1), pages 113-137, January.
    29. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    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. Joseph K. Kaboski, 2009. "Education, Sectoral Composition and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 168-182, January.
    2. Yasir Khan & Attiya Yasmin Javid, 2015. "The Impact of Formal and Informal Institutions on Economic Performance: A Cross-Country Analysis," PIDE-Working Papers 2015:130, Pakistan Institute of Development Economics.
    3. Zhang, Xiaobei & Wang, Xiaojun, 2021. "Measures of human capital and the mechanics of economic growth," China Economic Review, Elsevier, vol. 68(C).
    4. Adriana Di Liberto, 2007. "Convergence and Divergence in Neoclassical Growth Models with Human Capital," Economia politica, Società editrice il Mulino, issue 2, pages 289-322.
    5. Cem Ertur & Wilfried Koch, 2006. "The Role of Human Capital and Technological Interdependence in Growth and Convergence Processes: International Evidence," DEGIT Conference Papers c011_029, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Ralph Hippe & Roger Fouquet, 2024. "The Human Capital Transition and the Role of Policy," Springer Books, in: Claude Diebolt & Michael Haupert (ed.), Handbook of Cliometrics, edition 3, pages 411-457, Springer.
    7. Lorenzo Serrano-Martínez, 1999. "Capital humano, estructura sectorial y crecimiento en las regiones españolas," Investigaciones Economicas, Fundación SEPI, vol. 23(2), pages 225-249, May.
    8. Sylwia Zajączkowska-Jakimiak, 2006. "Wiedza techniczna i kapitał ludzki w teorii wzrostu gospodarczego," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 47-69.
    9. Palakiyèm Kpemoua, 2016. "Levels Of Education And Economic Performances Of Togo [Niveaux D’Education Et Performances Economiques Du Togo]," Working Papers halshs-01506650, HAL.
    10. Valerio Mendoza, Octasiano Miguel & Borsi, Mihály Tamás & Comim, Flavio, 2022. "Human capital dynamics in China: Evidence from a club convergence approach," Journal of Asian Economics, Elsevier, vol. 79(C).
    11. Muhammad Ali Asadullah, 2019. "Quadratic Indirect Effect of National TVET Expenditure on Economic Growth Through Social Inclusion Indicators," SAGE Open, , vol. 9(1), pages 21582440198, March.
    12. Silves J.C. Moreira & Pedro Cosme Vieira & Aurora A.C. Teixeira, 2014. "Estimating the human capital stock for Cape Verde, 1950-2012," FEP Working Papers 547, Universidade do Porto, Faculdade de Economia do Porto.
    13. 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.
    14. Husain, Muhammad Jami, 2010. "Contribution of health to economic development: A survey and overview," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-52.
    15. Milenko Popovic, 2006. "Capital Augmenting And Labor Augmenting Approach In Measuring Contribution Of Human Capital And Education To Economic Growth," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 2(4), pages 71-108.
    16. Ricardo Correa Cangussu & Marcio Antonio Salvato & Luciano Nakabashi, 2008. "An analysis of human capital on the Brazilian States income level: MRW versus Mincer," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211041150, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    17. Maria Rosa Trovato, 2020. "Human Capital Approach in the Economic Assessment of Interventions for the Reduction of Seismic Vulnerability in Historic Centres," Sustainability, MDPI, vol. 12(19), pages 1-33, September.
    18. Klaus Waelde, 1996. "Lifetime learning, biased technological change and the evolution of wages in the U.S. 1960 - 1990," Labor and Demography 9601001, University Library of Munich, Germany.
    19. repec:eee:labchp:v:3:y:1999:i:pc:p:2943-2984 is not listed on IDEAS
    20. Diana Dimitrova, 2018. "The 2018 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 98-152.
    21. Karahasan, Burhan Can & Uyar, Emrah, 2009. "Spatial Distribution of Education and Regional Inequalities in Turkey," MPRA Paper 30130, University Library of Munich, Germany, revised 2011.

    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    Statistics

    Access and download statistics

    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:nse:ecosta:ecostat_2020_517t_5. 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: Veronique Egloff (email available below). General contact details of provider: https://edirc.repec.org/data/inseefr.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.