Measurement of Labor Quality Growth Caused by Unobservable Characteristics
KOF Working Paper No. 203
23 Pages Posted: 26 Aug 2008
Date Written: July 2008
Abstract
The standard economy-wide indices of labor quality (or human capital) largely ignore the role of unobservable worker characteristics. In this paper, we develop a methodology for identifying the contributions of both observable and unobservable worker characteristics in the presence of the incidental parameter problem. Based on data for Switzerland over the period 1991-2006, we find that a large part of growth in labor quality is caused by shifts in the distribution of unobservable characteristics. The contributions to growth attributed to education and age are corrected downwards, if unobservable worker characteristics are taken into account. Yet the standard indices of labor quality appear to be robust to this extension.
Keywords: human capital, labor quality
JEL Classification: J24, J31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Growth in Euro Area Labour Quality
By Guido Schwerdt and Jarkko Turunen
-
Growth in Euro Area Labour Quality
By Guido Schwerdt and Jarkko Turunen
-
Assessing Potential Output Growth in the Euro Area: A Growth Accounting Perspective
By Alberto Musso and Thomas Westermann
-
Euro Area Production Function and Potential Output: A Supply Side System Approach
By Alpo Willman
-
Capital Quality Improvement and the Sources of Growth in the Euro Area
-
Trends and Patterns in Working Time Across Euro Area Countries 1970-2004: Causes and Consequences
-
Omitted Variables in the Measure of a Labour Quality Index: The Case of Spain
By Aitor Lacuesta, Sergio Puente, ...