Links for 12/16/10 Human Capital Edition

John Whalley and Xiliang Zhao

human capital plays a much more important role in China’s economic growth than available literature suggests… In addition, because human capital formation accelerated following the major educational expansion increases after 1999 (college enrollment in China increased nearly fivefold between 1997 and 2007) while growth rates of GDP are little changed over the period after 1999, total factor productivity increases fall if human capital is used in growth accounting as we suggest… this contribution is -7.03% between 1999 and 2008. Negative TFP growth along with the high contribution of physical and human capital to economic growth seem to suggest that there have been decreased in the efficiency of inputs usage in China or worsened misallocation of physical and human capital in recent years…

Raphael Auer

trade with richer nations tends to decrease the relative wage of skilled workers in poorer nations, which reduces the incentives to invest in human capital. So, does trade with rich nations "de-skill" emerging economies?...

proximity to skilled labour is associated with a 15% reduction of higher education, but only a 10% reduction in primary education…

Mike Mandel

The build-up of debt was a symptom of the real underlying problem: A massive write-down of U.S. knowledge capital over the past 10-15 years, combined with anti-innovation policies on the part of the government…

The value of knowledge capital depends, in part, on how rare it is…

Over the past 10-15 years, the strengthening of information flows into developing countries meant that knowledge capital was being distributed much more quickly around the world. As a result, the normal process of knowledge capital depreciation greatly accelerated in the U.S. and Europe–beneath the radar screen, because no statistical agency constructs a set of knowledge capital accounts.

What we should have been doing is boosting our investment in knowledge capital creation–education, R&D, business innovation. Instead, we borrowed to support consumption…

Tyler Cowen on Mike Mandel

I agree with the conclusion but I am not sure that globalization was the mechanism…

The more that your economy "looks like" the music sector, the more rapid the rate of depreciation for production capital and knowledge capital. This means we may be overestimating our national wealth…