Estimating the Value of Human Capital within the World Bank Wealth Accounting Framework
The purpose of this paper is to come up with an estimate for the value of human capital with the World Bank wealth accounting framework for the Latin American and Caribbean Region. The proposed approach draws connections between wealth accounting a...
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| Format: | Publications & Research |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2014/06/24126393/estimating-value-human-capital-within-world-bank-wealth-accounting-framework http://hdl.handle.net/10986/21717 |
| Summary: | The purpose of this paper is to come up
with an estimate for the value of human capital with the
World Bank wealth accounting framework for the Latin
American and Caribbean Region. The proposed approach draws
connections between wealth accounting and the development
accounting literature that explores the effects of education
and health on human capital, building on previous work by
Arrow and coauthors (2012), UNU-IHDP and UNEP (2012),
Farreira and Hamilton (2010), Weil (2007), and others. The
approach is extended to value the loss of human capital due
to air pollution and lack of access to clean water and
sanitation. The wealth accounting framework is underpinned
by the notion that total wealth is equal to the present
value of current and future consumption in a competitive
economy with constant returns to scale. The author uses a
series of calculations representing the framework for and
methodology of his framework. Later in this paper the author
breaks down the variables in determining the value of human
capital into the following categories: schooling, wages,
returns to education, returns to health, survival rate, time
period, social discount rate, and volatility. Each variable
is accompanied by an explanation of its relevance to the
equation. The results are quantified in a series of tables
paying attention to each individual variable including
comparisons to like studies over different time periods with
previously collected data to show emphasis. |
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