A Labor-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 5018, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We argue that a sensible measure of the aggregate value of human capital is the ratio of total labor income per capita to the wage of a person with zero years of schooling. The reason for that is that total labor 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 labor income. We find that one way to net out the effect of aggregate physical capital on labor income is to divide labor income by the wage of a zero-schooling worker. For the average U.S. 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.

JEL-codes: C82 O49 (search for similar items in EconPapers)
Date: 1995-02
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Published as Japan and the World Economy, Vol 9, no. 2 (May 1997): 159-191.

Downloads: (external link)
http://www.nber.org/papers/w5018.pdf (application/pdf)

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 Labour-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:nbr:nberwo:5018

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w5018

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().