A Labour-Income-Based Measure of the Value of Human Capital: An Application to the States of the United States

Casey Mulligan and Xavier Sala-i-Martin

No 1146, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We argue that a sensible measure of the aggregate value of human capital is the ratio of total labour income per capita to the wage of a person with zero years of schooling. The reason is that total labour income not only incorporates human capital, but also physical capital: given human capital, regions with higher physical capital will tend to have higher wages for all workers and, therefore, higher labour income. We find that one way to net out the effect of aggregate physical capital on labour income is to divide labour income by the wage of a zero-schooling worker. For the average US state, our measure suggests that the value of human capital during the 1980s grew at a much larger rate than schooling. The reason has to do with movements in the relative productivities of the different workers: in some sense, some workers and some types of schooling became a lot more relevant in the 1980s and, as a result, measured human capital increased.

Keywords: Human Capital; Panel Data Sets; Two-Sector Models of Growth (search for similar items in EconPapers)
JEL-codes: C82 O49 (search for similar items in EconPapers)
Date: 1995-03
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1146 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: A labor income-based measure of the value of human capital: An application to the states of the United States (1997)
Working Paper: A Labor-Income-Based Measure of the Value of Human Capital: An Application to the States of the United States (1995)
Working Paper: A labor-income-based measure of the value of human capital: An application to the States of the United States (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1146

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1146

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().