Abstract
Human capital refers to the ability and efficiency of people to transform raw materials and capital into goods and services, the consensus being that these skills can be learned through the educational system. The concept of human capital, necessarily, is related to the productivity of workers. Thus, this paper develops a productivity-based single measure of human capital, taking account of different levels of education and productivity differentials across workers. Using this new measure, the paper presents empirical estimates of human capital in Viet Nam and compares the stock of human capital contributed by vocational education and general education. The paper extends its analysis by investigating the extent to which human capital is utilized at different levels of education in the labor market. It also deals with equity in human capital, particularly as contributed by vocational education, and measures this equity across income quintiles and various socioeconomic and demographic groups in Viet Nam.
Highlights
Human capital refers to the ability and efficiency of people to transform raw materials and capital into goods and services, the consensus being that these skills can be learned through the educational system
We apply the methodologies developed in the study to data on the labor market in Viet Nam, with particular focus on the stock of human capital contributed by vocational education and general education
We aim to develop a new measure of human capital that takes into account different levels of education that different people acquire while accounting for their productivity
Summary
Human capital refers to the ability and efficiency of people to transform raw materials and capital into goods and services, the consensus being that these skills can be learned through the educational system. Years of schooling is widely used to measure human capital, it does not capture the multidimensional aspect of different kinds of skills required by the workforce to produce output. This brings us to test scores, an indicator suggested by Hanushek and Kimko (2000) that reflects the quality of education and is closely related to individual skill, but for which it is very difficult to get a measurement that can be reliably extrapolated for the entire workforce. We determine the productivity weights of different educational levels using the Mincer (1958) and Becker (1964) earnings functions This is the general methodology used in the paper. It takes a multidimensional approach to measuring human capital
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