Human capital theory originated to solve growth accounting’s unexplained residual

Evidence

In two seminal articles in the field, Solow reported that only a small part of the rapid economic growth of the United States in the early twentieth century could be attributed to increases in the size of the labor force or physical capital—the sources of investment traditionally thought to account for GDP growth. Schultz thought that the problem could be resolved if one took into account the sustained increase in private and public investments in education that had occurred over this period, an increase that was not the result of any conscious policy decision but that nevertheless had had the desirable effect of greatly improving GDP. Human capital investment, then, was the missing production factor in growth economics. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 249

Categorization

• XREF: Shows human capital arose from an internal technical puzzle in neoclassical growth accounting (Solow residual), not from a political agenda — relevant to the reader’s interest in how policy doctrine actually formed. — connects to: Human capital theory was born solving Solow’s unexplained-growth residual — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 249; Capital shapes human worlds beyond its economic operations and aims — Wendy Brown, Undoing the Demos: Neoliberalism’s…, 152

Broader Connections

• Human capital theory was born solving Solow’s unexplained-growth residual #corroborates (1.00) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 249
• Capital shapes human worlds beyond its economic operations and aims #expands (0.70) — Wendy Brown, Undoing the Demos, 152