Abstract
Although human capital is widely used as an input in modern economic growth models, in empirical studies, its importance in explaining economic growth is still an open issue. In fact, results range from influence in Gross Domestic Product growth rates to just a levels effect, and there are even several studies that find no significant explaining capability of human capital in economic growth. Human capital is usually measured through a proxy related to the population knowledge or to education. These proxies are prone to important measurement errors that may be the basis for the different found results of their effects on economic growth. The present study recognizes the importance of a good measure of human capital. It builds three annual series for Portugal, one of them based on years of schooling for the period 1960 to 2001, with a methodology different from other studies available for Portugal, and two others based on the market labour income for the period 1982 to 1998.
Highlights
Human Capital may be defined as the set of resources embedded in people
Empirical studies that introduce a proxy of human capital stock in modelling economic growth such as Mankiw et al (1992), Kyriacou (1991), Benhabib and Spiegel (1994), Pritchett (2001), Temple (1999), Bassanini and Scarpetta (2002), de la Fuente and Doménech (2001b) have not been consensual in the results found in terms of sign and significance of the human capital stock
In the present study we estimated series of human capital for Portugal that could improve on existing alternatives
Summary
Human Capital may be defined as the set of resources embedded in people. It has a multifaceted nature, ranging from knowledge to health. The population by educational attainment is weighted by the market value of the corresponding level of education This is a conceptually more correct proxy of the human capital stock but it is more difficult to obtain, especially when we are trying to build annual series. The use of migration flows, that these other studies ignore, is an important variable to take into consideration in the Portuguese case, and it introduces an important variation dimension for the between censuses years Another important aspect is that we use data on schooling completion instead of enrolment data, and we use a mortality rate to depreciate our human capital stock.
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