How much human capital does Eastern Europe have? Measurement methods and results

There is a general consensus that human capital is a major determinant of economic development. However, the range of available human capital variables is very wide in both a technical and a theoretical sense, so that different human capital measures are sometimes only loosely correlated. This is pa...

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Bibliographic Details
Published in:Post-communist economies 2008-06, Vol.20 (2), p.189-201
Main Authors: van Leeuwen, Bas, Földvári, Péter
Format: Article
Language:English
Subjects:
Correlation analysis
Eastern Europe
Economic development
Education
Human capital
Institutions
Market analysis
Market value
Measurement
Research methods
Studies
Variance
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Summary:There is a general consensus that human capital is a major determinant of economic development. However, the range of available human capital variables is very wide in both a technical and a theoretical sense, so that different human capital measures are sometimes only loosely correlated. This is partly because they capture different aspects of human capital ranging from the resources devoted to human capital creation (without taking account of market forces) to attaching a monetary value based on the market value of labour. Hence, different measures can lead to very different results and conclusions. This difference is especially prevalent in Eastern Europe, which experienced a massive expansion of formal education in the twentieth century which was not always matched by demand from the market or the efficiency of institutions. Consequently, if we look at the attainment figures only, we find that Eastern Europe had about 70-80% of the USA's human capital in per capita terms in the 1990s. Using methods that measure the market value of human capital, however, reduces this estimate to 10-20%.
ISSN:1463-1377
1465-3958
DOI:10.1080/14631370802018932