Abstract:
Distribution of human capital is a recent addition in the literature to the list of a few fundamental determinants of growth. This paper addresses an important problem associated with the empirical characterization of that distribution by utilizing the recently available distribution of the highest educational attainment in the labor force. We tried to fit the distribution of the number of years of school by over-dispersed Poisson and Negative-Binomial distributions. Based on the data compiled by Barro and Lee, none of the discrete distributions fit the data. The standard discrete probability distributions are
too smooth to account for the important information contained in the data, ie., schooling is more likely to be terminated at the completion of a category of schooling (e.g., primary, secondary, and higher education) than during a category, an important feature contained in the frequency distribution of highest educational attainment. Future research of this data should focus on more complex models which account for this "discontinuity" in the data, or modeling of other important features of the frequency distribution of highest educational attainment.
