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Barbara M. Fraumeni Muskie School of Public Service, USM, Portland, ME, USA

Muskie School of Public Service. Ph.D. Program in Public Policy. International Implementation of Jorgenson-Fraumeni Human Capital Accounts. Barbara M. Fraumeni Muskie School of Public Service, USM, Portland, ME, USA & the National Bureau of Economic Research, USA

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Barbara M. Fraumeni Muskie School of Public Service, USM, Portland, ME, USA

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  1. Muskie School of Public Service Ph.D. Program in Public Policy International Implementation of Jorgenson-Fraumeni Human Capital Accounts Barbara M. Fraumeni Muskie School of Public Service, USM, Portland, ME, USA & the National Bureau of Economic Research, USA World KLEMS, Methodology, Session 1: Labor Input Harvard University, Cambridge, MA, August 19, 2010

  2. Muskie School of Public Service Ph.D. Program in Public Policy • J-F: the Model • International efforts • OECD human capital consortium • China • Extensions & improvements

  3. Muskie School of Public Service Ph.D. Program in Public Policy Human Capital as Capital • Seminal: Becker (1964), Mincer (1974), Schultz (1961) • More recent • Economic sustainability and well-being • “Stiglitz” Commission: Commission on Economic Performance and Social Progress • World Bank Wealth Report

  4. Muskie School of Public Service Ph.D. Program in Public Policy Theoretical BasisJorgenson-Fraumeni • Neoclassical theory of investment (Jorgenson) • Investment amount as the price you would pay for a business machine that would help you earn future income

  5. Muskie School of Public Service Ph.D. Program in Public Policy Jorgenson-Fraumeni • Lifetime income projections • Depend upon education, age, and survival as well as income earned • Present discounted values adjusted for future expected income changes with contemporaneous information

  6. OECD Human Capital ConsortiumJorgenson-Fraumeni Australia, Canada, Denmark, France, Italy, Japan, Korea, Mexico, Netherlands, Norway, New Zealand, Poland, Romania, Russia, Spain, UK, US, EC (Eurostat), International Labour Organization, • Other countries who have already done J-F China, Sweden

  7. Muskie School of Public Service Ph.D. Program in Public Policy OECD Consortium IARIW Progress Report by Liu • Market only • Ages 15-64 • Ages 15-40 study & work • Ages 41-64 work only • Data on employment for 5-year age groups • Data on school enrollment by single year of age through age 29, 5-year age groups there-after

  8. Muskie School of Public Service Ph.D. Program in Public Policy OECD Consortium IARIW Progress Report by Liu • Discount rate of 4.58% and a real income rate growth rate of 1.32% following J-F (1992, Griliches volume) • Simplified methodology as suggested by Fraumeni (2008)

  9. Muskie School of Public Service Ph.D. Program in Public Policy IARIW OECD Report by LiuNominal Ratio of Human Capital to GDP, 2006

  10. Muskie School of Public Service Ph.D. Program in Public Policy IARIW OECD Report by LiuHuman Capital per Capita (Thous. of US$s)2006

  11. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China PaperLi, Liang, Fraumeni, Liu, and Wang • Ages • Males 16-60 • Females 16-55 • For comparison purposes same real income growth rate and discount rate • Base case income growth rates • Urban 6.00% • Rural 4.11%

  12. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper • Mincer equation to estimate income • Modification of contemporaneous enrollment information

  13. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper Educational Attainment by Gender1982 vs. 2007, Millions

  14. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper Real Human Capital (trillions of 1985 RMB)

  15. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper Nominal Human Capital (trillions of RMB)

  16. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper2006 Comparison Nominal ratio of human capital to GDP is 5.1 below the OECD consortium country range of 6.9 to 11.7

  17. Muskie School of Public Service Ph.D. Program in Public Policy IARIW Human Capital in China Paper

  18. Muskie School of Public Service Ph.D. Program in Public Policy Next Release: Provincial Human Capital Center for Human Capital and Labor Market Researchof theCentral University for Finance and Economics, Beijing, China & Hunan University students • Beijing • Gansu • Guangdong • Hunan • Jiangsu • Liaoning

  19. Muskie School of Public Service Ph.D. Program in Public Policy What Next for the OECD project? • Divisia quantity indexes • Will the nonmarket sector be added? • Will other countries become involved at a later date?

  20. Muskie School of Public Service Ph.D. Program in Public Policy Importance of Nonmarket Activities • 60-70% of the value of all activities comes from nonmarket activities (J-F) • Given the hours worked for pay of all hours available in a week, this is not too surprising • How could we survive without nonmarket activities?

  21. Muskie School of Public Service Ph.D. Program in Public Policy Jorgenson-Fraumeni Mark 2 No decisions, but we’ll be back!

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