The Utilization-Adjusted Human Capital Index
The World Bank Human Capital Index (HCI) is based on the productivity gains of future workers from human capital accumulation. But in many developing countries, a sizeable fraction of people are not employed, or are in jobs in which they cannot ful...
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/630311600204533950/The-Utilization-adjusted-Human-Capital-Index-UHCI http://hdl.handle.net/10986/34487 |
| Summary: | The World Bank Human Capital Index (HCI)
is based on the productivity gains of future workers from
human capital accumulation. But in many developing
countries, a sizeable fraction of people are not employed,
or are in jobs in which they cannot fully use their skills
and cognitive abilities to increase their productivity. The
Utilization-adjusted Human Capital Indices (UHCIs) adjust
the HCI for labor-market underutilization of human capital,
based on fraction of the working age population that are
employed, or are in the types of jobs where they might be
better able to use their skills and abilities to increase
their productivity (“better employment”). The UHCIs
generalize the growth-based interpretation of the HCI: the
inverse of a country's UHCI score represents long-run
GDP per capita with complete human capital and complete
utilization, relative to that under the status quo. The
UHCIs are designed to complement the HCI, and not to replace
it: they have different purposes, and the challenges of
measuring utilization mean that the UHCIs should be
interpreted with caution for policy analysis. Both
utilization measures are available for more than 160
countries, and are roughly U-shaped in per capita income,
suggesting human capital is particularly underutilized in
middle-income countries. Human capital is also underutilized
for women: while the HCI is roughly equal across boys and
girls, female UHCIs are typically lower than those for
males, driven by lower employment rates. |
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