Publication: Human Capital, Tangible Wealth, and the Intangible Capital Residual
Date
2013-03
ISSN
Published
2013-03
Author(s)
Hamilton, Kirk
Liu, Gang
Abstract
Since income is the return on wealth,
the total wealth of any given country should be on the order
of 20 times its gross domestic product. Instead the average
observed ratio from the balance sheet accounts of the System
of National Accounts is a factor of 2.6 to 6.6, depending on
whether natural resource stocks are included in the balance
sheet. The clear implication is that the System of National
Accounts wealth accounts are incomplete, with the most
obvious omission being human capital. Estimating the value
of human capital using the lifetime income approach for a
sample of 13 (mostly high-income) countries yields a mean
share of human capital in total wealth of 62 percent -- four
times the value of produced capital and 15 times the value
of natural capital. But for selected high-income countries
in the sample there is still an average of 25 percent of
total wealth that is unaccounted -- it is neither produced,
nor natural, nor human capital. This residual intangible
wealth is arguably the "stock equivalent" of
total factor productivity -- the value of assets such as
institutional quality and social capital that augment the
capacity of produced, natural and human capital to support a
stream of consumption into the future.
Link to Data Set
Citation
“Hamilton, Kirk; Liu, Gang. 2013. Human Capital, Tangible Wealth, and the Intangible Capital Residual. Policy Research Working Paper;No. 6391. © World Bank, Washington, DC. http://hdl.handle.net/10986/13176 License: CC BY 3.0 IGO.”
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