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Measurement of labor quality growth caused by unobservable characteristics

Thomas Bolli () and Mathias Zurlinden

No 2009-01, Working Papers from Swiss National Bank

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 worker characteristics. The overall index differs little from the standard indices, but contributions to growth attributed to education and age are corrected downwards.

Keywords: human capital; labor quality (search for similar items in EconPapers)
JEL-codes: J24 J31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009
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Journal Article: Measurement of labour quality growth caused by unobservable characteristics (2012) Downloads
Working Paper: Measurement of Labor Quality Growth: Caused by Unobservable Characteristics (2008) Downloads
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Handle: RePEc:snb:snbwpa:2009-01