Human Capital in China

70 Pages Posted: 17 Nov 2009 Last revised: 10 May 2023

See all articles by Haizheng Li

Haizheng Li

Georgia Institute of Technology - School of Economics

Barbara M. Fraumeni

Central University of Finance and Economics (CUFE)

Zhiqiang Liu

SUNY at Buffalo, College of Arts & Sciences, Department of Economics

Xiaojun Wang

University of Hawaii - Department of Economics

Date Written: November 2009

Abstract

In this paper we estimate China's human capital stock from 1985 to 2007 based on the Jorgenson-Fraumeni lifetime income approach. An individual's human capital stock is equal to the discounted present value of all future incomes he or she can generate. In our model, human capital accumulates through formal education as well as on-the-job training. The value of human capital is assumed to be zero upon reaching the mandatory retirement ages.China's total real human capital increased from 26.98 billion yuan in 1985 (i.e., the base year) to 118.75 billion yuan in 2007, implying an average annual growth rate of 6.78%. The annual growth rate increased from 5.11% during 1985-1994 to 7.86% during 1995-2007. Per capita real human capital increased from 28,044 yuan in 1985 to 106,462 yuan in 2007, implying an average annual growth rate of 6.25%. The annual growth rate also increased from 3.9% during 1985-1994 to 7.5% during 1995-2007. Therefore, although population growth contributed significantly to the total human capital accumulation before 1994, per capita human capital growth was primary driving force after 1995. The substantial increase in educational attainment during 1985-2007 contributed significantly to the growth in total and per capita real human capital.

Suggested Citation

Li, Haizheng and Fraumeni, Barbara M. and Liu, Zhiqiang and Wang, Xiaojun, Human Capital in China (November 2009). NBER Working Paper No. w15500, Available at SSRN: https://ssrn.com/abstract=1505824

Haizheng Li (Contact Author)

Georgia Institute of Technology - School of Economics ( email )

217 Habersham
Atlanta, GA 30332
United States

Barbara M. Fraumeni

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Zhiqiang Liu

SUNY at Buffalo, College of Arts & Sciences, Department of Economics ( email )

Buffalo, NY 14260
United States

Xiaojun Wang

University of Hawaii - Department of Economics ( email )

Honolulu, HI 96822
United States
808-956-7721 (Phone)
808-956-4347 (Fax)

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