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Development accounting using PIAAC data

Ana Hidalgo-Cabrillana (), Zoe Kuehn () and Cristina Lopez-Mayan ()

No 2017/02, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: We carry out a classical development accounting exercise using data from the Programme for the International Assessment of Adult Competencies" (PIAAC). PIACC data, available for 30 upper-middle and high-income countries and nationally representative for the working-age population, allow us to construct a multi- dimensional measure for the stock of human capital in each country, taking into account years of schooling, job experience, cognitive skills, on-the-job-training, and health. Individual level PIAAC data for the US are then used to estimate the weight of each dimension in the human capital composite by running Mincerian wage regressions. We find that differences in physical capital together with our broad measure of human capital account for 41% of the variance in output per worker, compared to only 27% when proxying human capital by average years of schooling only. Differences in cognitive skills play the largest role while experience and health are of lesser importance.

Keywords: development accounting; multi-dimensional human capital measure; PIAAC; Mincerian wage equation (search for similar items in EconPapers)
JEL-codes: O11 O4 I25 J11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2017-06
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Persistent link: https://EconPapers.repec.org/RePEc:uam:wpaper:201702

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