Comparison of input and output indicators in measuring human capital: An analysis at provincial level for Turkey

Abstract

Despite the intensive research on human capital, the debate regarding its measurement is ongoing. In this context, the objective of the present study is to underline the distinction between input and output indicators in human capital measurement, which has not attracted sufficient attention, and to present the importance of indicator selection by explaining the findings obtained. To that end, separate indexes will be developed for input and output indicators to measure the level of human capital for Turkey, and it will be analyzed whether the two index groups developed exhibit significant differences between provinces. In accordance with the purpose of this study, index estimations are made using the PCA method with the 2013 data of 81 provinces in Turkey. Province-based estimations demonstrate that the index values estimated by the input and output indicators produce significantly different conclusions. Therefore, selecting appropriate indicators according to the purpose of the study will enable the analyses to produce more accurate policy implications.