NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Experience Matters: Human Capital and Development Accounting

David Lagakos, Benjamin Moll, Tommaso Porzio, Nancy Qian

NBER Working Paper No. 18602
Issued in December 2012
NBER Program(s):   DEV   EFG   LS

The current consensus in the development accounting literature is that differences in aggregate human and physical capital stocks across countries account for less than half of cross-country income differences. This literature has found that taking human capital from experience into account does not change the explanatory power of human capital. In this paper, we document a new fact that suggests a different conclusion. We find that experience-wage profiles are flatter in poorer countries than in richer countries. Taking this into account substantially increases the contribution of human and physical capital in development accounting.

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This paper was revised on November 25, 2013

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18602

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