Skills-adjusted human capital shows rising global gap

Abstract

Human capital, broadly defined as the skills acquired through formal education, is acknowledged as one of the key drivers of economic growth and social development. However, its measurement for the working-age populations, on a global scale and over time, is still unsatisfactory. Most indicators either only consider the quantity dimension of education and disregard the actual skills or are demographically inconsistent by applying the skills of the young cohorts in school to represent the skills of the working-age population at the same time. In the case of rapidly expanding or changing school systems, this assumption is untenable. However, an increasing number of countries have started to assess the literacy skills of their adult populations by age and sex directly. Drawing on this literacy data, and by using demographic backprojection and statistical estimation techniques, we here present a demographically consistent indicator for adult literacy skills, the skills in literacy adjusted mean years of schooling (SLAMYS). The measure is given for the population aged 20 to 64 in 185 countries and for the period 1970 to 2015. Compared to the conventional mean years of schooling (MYS)—which has strongly increased for most countries over the past decades, and in particular among poor countries—the trends in SLAMYS exhibit a widening global skills gap between low- and high-performing countries.