Measuring returns to education and human capital

Abstract

Measuring human capital has been a challenge for economists. In the MENA region, scarcity of comparable and reliable data complicates the task. To overcome this challenge, we rely on an international survey that covers most of the region. In addition to current estimates, we make a forward-looking assessment of how human capital stocks may change in the future. We found human capital stocks are low in most SEMC, except in Israel and Turkey, where returns to education are flat. Despite high attainment levels, Greece, Spain, and Portugal perform poorly, only marginally surpassing the bottom-ranked SEMC. Thus improving attainment levels can produce measurable gains in the future only when the returns to education are high.