Measuring Human Capital in the Economy : Applications for Bulgaria

This article has two main objectives: The first one is to review the most commonly used methods of measuring human capital in the macroeconomic analysis. Here, a summary of methods considering educational characteristics of population and labour force is presented, such as usage of literacy rate, enrollment rates, educational attainment, labor income and quality of education. A challenge in front of human capital measuring is solving the problems related to its depreciation as well as those relating to the quality of education. Another disadvantage of the discussed approaches stems from a key assumption (imposed due to objective reasons) that the education leads to equal accumulation of human capital in all students. The inclusion of individual factors in measuring the stock of human capital is still an unsolved problem in economics. The second objective of the paper is to apply some of these approaches to the economy of Bulgaria in the years of communism (for which there are no human capital estimates yet). As a result, the research provides annual data measuring the level of human capital in the country for future empirical analysis