Human capital in Britain, 1760–2009

Jan Kunnas

Scandinavian Economic History Review, 2016, vol. 64, issue 3, 219-242

Abstract: Human capital can be defined as the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being. It is arguably one of the most important determinants of economic growth. In general, human capital has been calculated with two different approaches: (1) retrospective method through the expenditures on education, (2) prospective through the discounted sum of the wages it would receive over the expected number of remaining working years. In this paper we use the prospective method to calculate human capital in the UK from the mid-eighteenth century to the present, providing the by far longest estimate for human capital for any country. To overcome the problems related to the scarcity of historical data, we developed a method which is able to make the most efficient use of the scarce data available for the eighteenth and nineteenth centuries. Our calculations show a 112-fold increase of human capital, and a 13-fold increase of human capital per worker and per capita from 1760 to 2009. Using cumulative schooling expenditures from 1833 to 2000, we examine whether increased spending on schooling explains this phenomenal growth in human capital.

Date: 2016
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DOI: 10.1080/03585522.2016.1208625

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