Experience Matters: Human Capital and Development Accounting

I study how the relative efficiency of high- and low-skill labor varies across countries. Using microdata for countries at different stages of development, I document that differences in relative quantities and wages are consistent with high-skill workers being relatively more productive in rich countries. I exploit variation in the skill premia of foreign-educated migrants to discriminate between two possible drivers of this pattern: cross-country differences in the skill bias of technology and in the relative human capital of skilled labor. I find that the former is quantitatively more important, and discuss the implications of this result for development accounting. (JEL I26, J24, J31, J61, L16, O15)

Download Full-text

Development Accounting

American Economic Journal Macroeconomics ◽

10.1257/mac.2.1.207 ◽

2010 ◽

Vol 2 (1) ◽

pp. 207-223 ◽

Cited By ~ 91

Author(s):

Chang-Tai Hsieh ◽

Peter J. Klenow

Keyword(s):

Human Capital ◽

Total Factor Productivity ◽

Capital Accumulation ◽

Physical Capital ◽

Human Capital Accumulation ◽

Factor Productivity ◽

Income Levels ◽

The Past ◽

Development Accounting ◽

Proximate Determinants

Researchers have made much progress in the past 25 years in accounting for the proximate determinants of income levels: physical capital, human capital, and Total Factor Productivity (TFP). But we still know little about why these factors vary. We argue that TFP exerts a powerful influence on output not only directly, but also indirectly, through its effect on physical and human capital accumulation. We discuss why TFP varies across countries, highlighting misallocation of inputs across firms and industries as a key determinant. (JEL E22, E23, F21, F35, O10, O40)

Download Full-text

Human Capital and Development Accounting: New Evidence from Wage Gains at Migration

10.21034/iwp.1 ◽

2017 ◽

Cited By ~ 5

Author(s):

Lutz Hendricks ◽

Todd Schoellman

Keyword(s):

Human Capital ◽

Development Accounting ◽

New Evidence

Download Full-text

Human Capital and Macroeconomic Development: A Review of the Evidence

The World Bank Research Observer ◽

10.1093/wbro/lkaa002 ◽

2020 ◽

Vol 35 (2) ◽

pp. 227-262

Author(s):

Federico Rossi

Keyword(s):

Human Capital ◽

New Technologies ◽

Policy Implications ◽

Policy Debates ◽

Development Accounting ◽

Aggregate Production Function ◽

Cross Country ◽

Complementary Inputs ◽

Future Work

Abstract The role of human capital in facilitating macroeconomic development is at the center of both academic and policy debates. Through the lens of a simple aggregate production function, human capital might increase output per capita by directly entering in the production process, incentivizing the accumulation of complementary inputs, and facilitating the adoption of new technologies. This paper discusses the advantages and limitations of three approaches that have been used to evaluate the empirical importance of these channels: cross-country regressions, development accounting, and quantitative models. The key findings in the literature are reviewed and some of them are replicated using updated data. The bulk of the evidence suggests that human capital is an important determinant of cross-country income gaps, especially when its measurement is broadened to go beyond simple proxies of educational attainment. The paper concludes by highlighting policy implications and promising avenues for future work.

Download Full-text

The Human Capital Stock: A Generalized Approach: Comment

The American Economic Review ◽

10.1257/aer.20171787 ◽

2019 ◽

Vol 109 (3) ◽

pp. 1155-1174 ◽

Cited By ~ 6

Author(s):

Francesco Caselli ◽

Antonio Ciccone

Keyword(s):

Human Capital ◽

Capital Stock ◽

Economic Environment ◽

Relative Wage ◽

Skilled Workers ◽

Different Types ◽

Development Accounting

Jones (2014 ) examines development accounting with imperfect substitutability between different types of skills in the production of output. He finds that human capital variation can account for the totality of the variation in income across countries. We show that this finding is entirely due to an assumption that the relative wage of skilled workers is solely determined by attributes of workers (once the supply of skilled workers is accounted for). If skill premia are predominantly determined by technology, institutions, and other features of the economic environment, human capital differences explain none of the variation in income per worker. (JEL E24, I26, J24, J31)

Download Full-text