The stock of human capital that is currently available is a central determinant of any country's economic development. However, attempts at empirically measuring the human capital stock, both for a given economy and in a comparative perspective, are faced with a number of problems which have not been solved in a comprehensive and entirely satisfactory way through most existing approaches.
In a recent study by R.H Haveman, A. Bershadker and J.A. Schwabish ("Human Capital in the United States from 1975 to 2000: Patterns of Growth and Utilization", Kalamazoo: Upjohn Institute 2003), a new approach to measuring the development and the utilization of human capital is suggested and fully expemplified for the case of the US in the period from 1975 to 2000. The follow-up study by the Ifo Institute aims at parallel calculations for (West) Germany, highlighting major trends in the patterns of growth and utilization of human capital in this country and spanning the period from the early 1970s to the present. In co-operation with Robert Haveman, the basic concept may have to be refined with respect to minor details that become important when it is a applied to a German context. In addition, the results will be compared to those obtained for the US, and policy implications will be worked out that may most notably be related to institutional causes of the growing under-utilization of human capital in Germany.
A core ingredient of the methodology suggested by Haveman et al. (2003) are econometric estimates of wages as a function of quite a number of individual and householdlevel characteristics (e.g., gender, age, nationality, formal qualifications, job experience, marital status, number of children) based on the Heckman (1979) two-stage procedure. The methodology thus avoids biased estimates that could arise from the non-observability of wages for individuals who are currently not employed. Furthermore, it can be used to impute wages to non-employed individuals in order to assess the total earnings capacity of the entire population of working age – a measure that is closely related to the basic definition of human capital as an analytical tool of economic theory.
Two sets of micro-level data appear to be suited to serve as main data sources for an application of the Haveman et al. (2003) approach to (West) Germany: a series of annual "Micro-Censuses" that the Federal Statistical Office has conducted starting from the early-1970s, or data emerging from the German Socio-Economic Panel (G-SOEP) that are more detailed regarding a number of relevant aspects but cover only the period from 1984 onwards. If the advantage of the Micro-Census in terms of a longer observation period turns out to be fully effective even in the light of actual data access, both sources may be used for alternative estimates and calculations.
One of the main findings of the study is that the stock of human capital in Germany, measured by its yield in terms of potential wage earnings both in the aggregate and on average of working-age individuals, appears to be unreservedly high. Likewise, the growth of these variables – especially in per-capita terms – turns out to be very strong. However, some problems were revealed regarding the actual utilisation of the stock of human capital. Since 1984, the utilisation of human capital has remained at most stable in (western) Germany. This is attributed to the growth of the utilisation of human capital among women. In east Germany the utilisation rates of human capital declined.This is observable not only during the period of transformation but also since the middle of the 1990s. In contrast to the results obtained for Germany, during the last twenty years the stock of human capital in the U. S. grew slowly, whereas the utilisation rates rose continuously.
Martin Werding, Robert Jäckle, Christian Holzner, Marc Piopiunik and Ludger Wößmann, "Humankapital in Deutschland: Wachstum, Struktur und Nutzung der Erwerbseinkommenskapazität von 1984 bis 2006", Mohr Siebeck, Tübingen, 2009.
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