Measuring Aggregate Human Capital

55 Pages Posted: 25 May 2006 Last revised: 17 Sep 2022

See all articles by Casey B. Mulligan

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Xavier Sala-i-Martin

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Date Written: February 1995

Abstract

In this paper we construct a set of human capital indexes for the states of the United States for each Census year starting in 1940. In order to do so, we propose a new methodology for the construction of index numbers in panel data sets. Our method is based on an optimal approach by which we choose the 'best' set index numbers by minimizing the expected estimation error subject to some search constraints. Some of the empirical findings are that the stock of human capital in the United States grew twice as rapidly as the average years of schooling and that human capital inequality across states went up during the 1980s (while the dispersion of schooling actually fell). We conclude that using the average years of schooling for the empirical study of existing growth models may be misleading.

Suggested Citation

Mulligan, Casey B. and Sala-i-Martin, Francesc Xavier, Measuring Aggregate Human Capital (February 1995). NBER Working Paper No. w5016, Available at SSRN: https://ssrn.com/abstract=225795

Casey B. Mulligan (Contact Author)

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Francesc Xavier Sala-i-Martin

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