The Contribution of Highways to GDP Growth

This paper constructs updated measures of productive highway capital stocks at the total, Interstate, Non-interstate, and Local System levels to estimate the contribution of all highways (all public roads) to GDP growth. It presents three types of contribution to GDP growth estimates and an experimental structure estimate reflecting the quality of bridges. These three contributions, estimated from the viewpoint of a national income accountant, are: 1) The contribution of highway investment to growth in GDP, 2) The contribution of highway capital input to growth in adjusted GDP, and 3) The contribution of highways gross output to growth in adjusted U.S. gross output. The data effort moves beyond productive capital stocks in order to assess the contribution of highways to economic growth; measures of capital input (which requires rates of return), highway "industry" gross output, and U.S. gross output estimates are needed. These contribution estimates provide a different perspective on the importance of highways for economic growth from those produced using different methodologies, which commonly employ econometric techniques.

Human Capital Accounts: Choice of Rates and Construction of Volume Indices

Both human capital and nonhuman capital play an important role in economic growth. Estimates of nonhuman (physical) capital exist for many more countries than for human capital. Recently there has been a significant increase in the number of countries for which estimates of human capital exist, primarily because of the OECD human capital project, which has constructed nominal Jorgenson-Fraumeni human capital stocks for eleven countries. As the OECD project continues, it is important to reflect on the rates used in this project and in other efforts. Although two real rates need to be chosen: a discount rate and a rate of growth of labor income, what really matters is the size of the adjustment factor which incorporates both rates. In order to best understand the role of human capital in economic growth, volume (quantity) indices need to be constructed. This paper outlines how total and partial indices can be constructed, which along which companion contributions, will allow for more informative and detailed cross-country and individual country analyses.

Human Capital In China

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.