Accounting for the Stock of Human Capital

Human capital has been represented in several studies by years of schooling, educational attainment, and literacy rates. Years of schooling is so widely used in the human capital estimates that utilize both aggregate data and micro data. There are two immediate reasons that come to mind. First, years of schooling are a useful indicator of capital accumulation, particularly when there are no other readily available measures--for either individuals or economy-wide time series. In cross-country comparisons, years of schooling are often the only feasible measure. Second, there is a theoretical argument that indicates that years of schooling are a measure of the stock of human capital under a reasonable set of assumptions