Measuring human capital and testing a monetary measurement in a growth equation

Abstract

This study examines the usability of one of the measures of human capital, an income-based stock type monetary value, in growth equations. The nature and value of human capital is one of the core questions of economics. After the creation of the first macroeconomic models, the definition of human capital and its impact on economic growth soon came to the fore, though the variables representing human capital started to be incorporated into the models only after a few decades. There are several approaches to the relationship, and there is no unified understanding of how human capital can influence the development and growth of the economy.

So far, researchers have thought in different directions concerning two methodological questions. First, different models have been used to demonstrate the impact of human capital on economic performance, the other methodological problem unfolded around the measurement of human capital. This study first briefly presents the models researching the impact of human capital on economic growth, and then takes into account the measurement possibilities of human capital. One of the measures expresses the value of human capital in monetary terms based on future earnings, while others use different measurement methodologies. An important question is, which measurement can lead to more accurate and usable conclusions.