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Is Education a Good Proxy for Human Capital? Measurement and Distributional Issues in Portugal during the 19th Century
| Human capital can be measured in many ways but the most usual (and easy) ones are based on schooling efforts. Arguably, this can be justified when considering the importance of human capital capacity for citizenship, for welfare and the quality of life, or for the formation of social capital, but not when we are concerned with its effect on the productive capacity of workers.
In this paper, we use the example of the 19th century Portuguese industrial population to assess the evolution of the human capital stock and its distribution over time, as measured by the market value of specific productive skills (the skill premium) which were usually “learned on the job”. We compare this with the results obtained by employing schooling based indicators. The conclusion seems to be that at least in the early stages of economic development, and possibly until the Inter-War period, literacy rates or years of schooling may be misleading because 1) general purpose education, which was the most common, had not yet then come to matter significantly to economic performance; 2) literacy and “working skills” are more weakly correlated than is usual thought.
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