NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring Aggregate Human Capital

Casey B. Mulligan, Xavier Sala-i-Martin

NBER Working Paper No. 5016
Issued in February 1995
NBER Program(s):   EFG

In this paper we construct a set of human capital indexes for the states of the United States for each Census year starting in 1940. In order to do so, we propose a new methodology for the construction of index numbers in panel data sets. Our method is based on an optimal approach by which we choose the 'best' set index numbers by minimizing the expected estimation error subject to some search constraints. Some of the empirical findings are that the stock of human capital in the United States grew twice as rapidly as the average years of schooling and that human capital inequality across states went up during the 1980s (while the dispersion of schooling actually fell). We conclude that using the average years of schooling for the empirical study of existing growth models may be misleading.

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Document Object Identifier (DOI): 10.3386/w5016

Published: Mulligan, Casey B & Sala-i-Martin, Xavier, 2000. " Measuring Aggregate Human Capital," Journal of Economic Growth, Springer, vol. 5(3), pages 215-52, September. citation courtesy of

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