Modification of the World Bank Human Capital Index calculation methodology for Russian regions

Abstract

In this paper we modify the methodology for calculating the Human Capital Index that is used by the World Bank. This modification is required due to the inapplicability of the original methodology to the analysis of human capital in the regions of Russia caused by the absence of some of the original data in Russian statistics. The article analyzes the method of calculating the Human Development Index, which is used to estimate human capital in the regions of Russia, and shows the main problems of its application. First of all, these problems are associated with the excessive dependence of the final index on GRP per capita. The main goal of this research is to compare human development of Russian regions via calculating Human Capital Index, which includes modeling based on three subindices — survival, education, and health scores. Due to the complete or partial absence of some of the data necessary to calculate the final index for Russian regions, their proxies were used. The major changes had to be made in the methodology for calculating the education subindex. The main obstacle to the use of the World Bank methodology without changes is the lack of open data that could evaluate the quality of school education in the region. The results were tested on the data of the regions of Russia for 2019. The results made it possible to compile a ranking of Russian regions by the level of human capital development. The ranking of regions with the best development of human capital was headed by St. Petersburg, Kaliningrad region and Moscow. The anti-ranking regions were Dagestan, Chechnya, Ingushetia, Buryatia and Tyva. A strong dispersion between regions by the level of human capital development was shown. The main contribution to the differentiation of regions according to the constructed index is made by the education subindex. The conclusion is made about the limits and possibilities of applicability of this method in Russian conditions.