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Human Capital, Productivity and Growth

  • Economics
  • Education


In this paper new estimates of human capital prices and quantities, taking into account technological change in human capital production and endogenous education choice, are presented for both Canada and the United States. The implications of the estimates for the sources of growth are examined. The most striking result is that adjusting the labour input for quality increases reduces the contribution of MFP growth in standard of living growth to zero. The largest part of this quality increase is not due to composition changes but instead to technological change in human capital production. Since most attempts at adjusting the labour input for quality changes only deal with composition, they cannot capture a large part of the quality change. The results suggest that technological improvement in human capital production could be the major source of standard of living growth in the last few decades.

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