An integrated approach for estimating the stock of human capital in the United States is developed which eliminates well known problems associated with both the cost and income based methods currently in use. Historical information on the cost of the educational investment made in base entrants (individuals who enter the full time labor force immediately following high school graduation) and the wage rate they receive upon entry into the work force is used to compute a rental rate for human capital. The human capital stock for other cohorts of the work force is then estimated using that rental rate and the reported earnings for each population subgroup. This method neutralizes the cost identification problems associated with the work of Kendrick and Eisner. It also allows a more realistic treatment of the depreciation and appreciation of human capital. When used to estimate a Cobb-Douglas production function of the U.S. economy for the period 1963-1988, this measure provided more explanatory power than hours of labor.


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