Measuring human capital in Portugal

Abstract

Although human capital is widely used as an input in modern economic growth models, in empirical studies, its importance in explaining economic growth is still an open issue. In fact, results range from influence in Gross Domestic Product growth rates to just a levels effect, and there are even several studies that find no significant explaining capability of human capital in economic growth. Human capital is usually measured through a proxy related to the population knowledge or to education. These proxies are prone to important measurement errors that may be the basis for the different found results of their effects on economic growth. The present study recognizes the importance of a good measure of human capital. It builds three annual series for Portugal, one of them based on years of schooling for the period 1960 to 2001, with a methodology different from other studies available for Portugal, and two others based on the market labour income for the period 1982 to 1998.