Human Capital, Tangible Wealth, and the Intangible Capital Residual

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.

Bibliographic Details

Main Authors:	Hamilton, Kirk, Liu, Gang
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2013-03
Subjects:	ACCOUNTING, ACCOUNTING FRAMEWORK, ACCOUNTING PERIOD, AFFILIATED ORGANIZATIONS, ASSET VALUES, ASSETS, BALANCE SHEET, BALANCE SHEETS, BANK ASSET, CAPITAL ACCOUNTS, CAPITAL ACCUMULATION, CAPITAL INVESTMENT, CAPITAL SHARE, CAPITAL STOCK, CAPITAL STOCKS, COMPARATIVE ANALYSIS, CONSTANT RETURNS TO SCALE, CURRENCY, DEFLATORS, DEMOGRAPHIC, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISCOUNT RATE, DISCOUNT RATES, DOLLAR PRICES, ECONOMIC RESEARCH, ECONOMIC SURVEYS, ECONOMIC THEORY, ECONOMIC VALUE, ECONOMICS LITERATURE, ECONOMICS OF EDUCATION, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPLOYMENT, EQUIPMENT, EXCHANGE RATES, EXPECTED VALUE, FIXED ASSETS, FOREIGN ASSETS, FUTURE EARNINGS, FUTURE GROWTH, GDP, GROSS DOMESTIC PRODUCT, GROWTH RATE, GROWTH RATES, HOLDING, HOMOGENEOUS GOOD, HUMAN CAPITAL, HUMAN DEVELOPMENT, INCOME, INCOME GROUPS, INCOME GROWTH, INCOME MEASURES, INCOMES, INTANGIBLE, INTANGIBLE ASSETS, INTEREST RATE, INTERNATIONAL BANK, INVENTORY, INVESTING, LABOR MARKET, MARGINAL PRODUCT, MARGINAL UTILITY, MARGINAL UTILITY OF CONSUMPTION, NATIONAL INCOME, NATURAL CAPITAL, NATURAL RESOURCE, NATURAL RESOURCES, NET FOREIGN ASSETS, PER CAPITA INCOME, POSITIVE EXTERNALITIES, POTENTIAL OUTPUT, POWER PARITIES, PRESENT VALUE, PRIVATE RETURNS, PRODUCTION FUNCTION, PURCHASING POWER, RATE OF RETURN, RATES OF RETURN, REAL GDP, REAL GROWTH RATE, REAL INCOME, RETIREMENT, RETURN, RETURN ON ASSETS, RETURNS, SAVINGS, SAVINGS RATES, SOCIAL CAPITAL, SOCIAL VALUE, STOCKS, SUSTAINABLE DEVELOPMENT, TECHNOLOGICAL CHANGE, TOTAL FACTOR PRODUCTIVITY, TOTAL FACTOR PRODUCTIVITY GROWTH, VALUE OF ASSETS, WAGES, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2013/03/17488083/human-capital-tangible-wealth-intangible-capital-residual http://hdl.handle.net/10986/13176
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