Evolution of the annual human capital index for brazilian economy: 1995-2022

Abstract

In this paper, we construct the Human Capital Index (ICH) for Brazil, covering the period from 1995 to 2022. We used microdata from National Household Sample Survey (PNAD) and PNAD Contínua, both made available by Brazilian Institute of Geography and Statistics (IBGE). We adapted the methodology used by several international organizations, such as the Bureau of Labor Statistics (BLS). The ICH captures structural movements in the quality of the Brazilian workforce, given the wide temporal range of the data, and its derivation is compatible with the usual methodology for decomposing economic growth. We thus used the ICH to adjust the labor factor in the total factor productivity (TFP) calculation. The results show that ICH presented an average annual growth of 2.2% between 1995 and 2022. In addition, the in-clusion of the ICH influenced the TFP dynamics, which registered an average annual drop of 0.9% in the analyzed period.