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University of Chicago and International Monetary Fund, respectively. The paper was prepared while the authors were in the European I Department. Helpful comments by Martin Hardy and by the Spanish authorities are gratefully acknowledged. The projections are illustrative and are not those of the Fund.
On a more negative note, the comparatively high proportion of people aged 25-29 that have completed college or advanced vocational degrees might be partly related to massively higher youth unemployment in Spain than in other countries.
Data on hourly wages are not available at the required level of disaggregation (educational attainment, age, and gender). Earnings are therefore used as a proxy, assuming that average hours worked per worker are the same for all groups. Although there may be differences among the various groups in this respect, most of the differences in earnings are likely to reflect differences in hourly wages rather than in hours.
This might be partly due to the fact that women interrupt their careers more frequently than men do, for example for child rearing, and to the fact that they hold relatively more part-time jobs than men do.
This might explain why current enrollment rates in higher levels of education are higher for women.
The same measure computed separately by gender shows that women’s average human capital grew faster than mens’ (1.66 percent versus 0.87 percent over the whole period, though both show similar increases in the growth rate). This counteracted the downward pressure on growth rates induced by faster increases in female participation rates than in male participation rates.
As a result, the overall labor force participation rate is projected to rise, as expected.
At the same time, these effects have apparently not operated in the last three years, when rapid employment growth has been accompanied by relatively high growth in the human capital index, suggesting that perhaps the jobs created over the past three years were of higher quality than those created in previous upturns.
This functional form is standard. Nevertheless, it is important to note that the choice of functional form can have important implications for the absolute size of the human capital contribution to economic growth. In fact, for example, the alternative functional form suggested by Mankiw, Romer, and Weil (1992), Y = A Kl-α hβ Ll-α-β, with β being typically assumed to equal 0.3, would result in a much lower contribution, because the growth rate of human capital would be multiplied by 0.3 instead of 0.7 as is the case with the form used in this paper. At the same time, changes over time in the contribution of human capital accumulation would follow the same patterns using either methodology.
Data limitations imply that the number of hours worked per worker needs to be assumed to be the same for all groups of workers.
In 1980, the Estatuto de los Trabajadores reduced the work week from 48 hours to 40 hours. The share of part-time salaried employment increased from 5 percent in 1987 (the first year for which data are available) to 8 percent in 1997.