AGE MATTERS, ISSUE NUMBER 12, April 2005
Measuring the Stock of Human Capital
Enhancing the National Population Census
Increased Age Cut Offs for Selected Surveys
Information Development Plan (IDP)
Did you know?
New data releases
Where can you find us?
Welcome to the April 2005 issue of Age Matters.
As noted in previous editions of this newsletter, a major activity for the coming year is the compilation of the Information Development Plan. For this issue we have provided a brief update on the status of the IDP and a reference to the work being undertaken in the field of children and youth statistics.
In this issue of Age Matters you will find the following main articles of interest:
- Measuring the Stock of Human Capital
- Enhancing the National Population Census
- Increased Age Cut Offs for Selected Surveys
I hope you continue to find this newsletter a valuable resource. Any comments or suggestions on improving our newsletter are always welcome.
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MEASURING THE STOCK OF HUMAN CAPITAL
Human capital is an important concept in modern economics and in economic policy discourse. Unfortunately, direct measures of human capital stocks are available for very few countries. A research paper, Measuring the Stock of Human Capital (cat.no. 1351.0.55.001) was re-issued in March 2005 to provide experimental measures of the stock of human capital for Australia. The aim is to present accounts of developments and research work or analysis of an experimental nature so as to encourage discussion and comment.
The working paper adopts a ‘lifetime labour income approach’. This method measures the stock of human capital as the discounted present value of expected lifetime labour market income. Expected income streams are derived by using cross-sectional information on labour income, employment rates and school participation rates. This approach is also able to account for the effect on human capital formation of current schooling activities — that is, it can account for additional human capital embodied in those individuals who are still participating in formal schooling and who anticipate improved employment and income prospects as a result.
The paper uses full Australian Census data for 1981, 1986, 1991, 1996 and 2001, which provides five snapshots of age-earnings profiles for four categories of educational attainment for both men and women over this 20-year period. Based on these age-earnings profiles, this study derives per capita measures of lifetime labour market incomes for each age/sex/education cohort, and applies these per capita measures to the number of people in the corresponding cohort. It then aggregates across all cohorts to estimate the human capital stock for Australia. The study results show that there has been a significant increase in the stock of human capital in Australia over the 20-year period, characterised by sharply rising shares of total human capital attributable to more educated workers. It also shows that the value of human capital stock is significantly greater than that of physical capital.
In the Australian System of National Accounts (ASNA), measures of capital stocks are confined to physical capital and that it is not yet standard practice for any official statistical agency to include human capital in their capital stock measures. Although human capital is one of the most important assets of a country and a key determinant of a nation’s economic performance, it is left unaccounted for in the national accounts. This is because there is a lack of consensus about how this important economic variable should be measured. Even if such consensus was achieved, there would still be many methodological difficulties to overcome. Indeed, human capital is different from physical capital, and this lies at the foundation of the difficulties encountered in measuring human capital. The following quotation from the System of National Accounts 1993 (paragraph 1.52.) sheds light on the reason why measures of human capital are still missing from the ASNA:
'...while knowledge, skills and qualifications are clearly assets in a broad sense of the term, they cannot be equated with fixed assets as understood in the System (of National Accounts)... Education assets are embodied in individuals as persons. They cannot be transferred to others and cannot be shown in the balance sheets of the enterprises in which the individuals work. Education assets could possibly be shown in balance sheets for the individuals in which they are embodied, but individuals are not enterprises. They would be difficult to value...'
This experimental study focuses on the Australian adult working age population, defined as everyone aged between 25 years and 65 years. Again there were other possibilities. The ABS Labour Force Survey, for example, looks at the 15–64 year age group. Others studies look at 18–64 year olds. The age someone has formed their basic productive capacity (human capital skills) and the age at which they cease productive activity are the key issues to consider. There are no straightforward answers. As modern economies are characterised by rapid technological changes and increasing demand for skilled labour, more and more people choose to allocate more time to investments in their human capital and therefore delay joining the labour force. In the present study 25 years was chosen as the age at which individuals actively pursue productive activities and 65 years as the age at which they retire. This somewhat arbitrary choice, while not crucial, could easily be relaxed and extended to other age groups. A future update may undertake sensitivity analyses of the impact of the choice of age groups on the stock value of human capital.
Graphs 1 to 4 display gross annual income per capita for males and females constructed from the 1981 and 2001 Australian Censuses to illustrate the age-earnings profiles. The greatest jump in income occurs between those without degrees and those with degrees. The educational differences in income between the bottom two education groups are relatively small. It also shows that the annual income of more educated groups increases more sharply with age than for less educated groups. This suggests a wage premium may exist for more educated workers associated with time spent in the labour market.
Graphs 5 to 8 display gross lifetime income per capita for males and females computed from the 1981 and 2001 Census data. These charts show the present value of the discounted income stream of income for four levels of educational attainment for men and women aged 25–65 years. A few factors affect the shape of the lifetime income curves. The first factor is the age range at which annual income peaks. The age-income profiles charted demonstrate that the income (earnings) premiums generated by higher educational attainment increases with time spent in the labour market.
The study demonstrates how human capital can be estimated by a lifetime labour income approach and calculates experimental estimates of values of human capital stock embodied in the adult population of Australia for the census years 1981, 1986, 1991, 1996 and 2001. The results of this exercise show significant increases in the value of human capital and that the more educated components of the Australian human capital stock have increased dramatically, particularly for women.
For more information please contact Hui Wei, firstname.lastname@example.org.
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ENHANCING THE NATIONAL POPULATION CENSUS
The ABS has released a Discussion Paper entitled Enhancing the Population Census: Developing a Longitudinal View (cat. no. 2060.0). The paper seeks the views of Australians on a proposal to enhance the value of 2006 Census of Population and Housing data by combining it over time with data from other censuses and using it with a limited number of additional datasets.
The central feature of the proposal is the creation of a Statistical Longitudinal Census Dataset (SLCD) – this involves combining the information provided in the 2006 population census, with information provided in other censuses, using statistical techniques. Other parts of the proposal outline using the census data in combination with other selected data sets, such as ABS household surveys and birth and death register data. The proposal is described in more detail in the discussion paper available on the ABS web site <www.abs.gov.au>
In its present form, the Census only provides a 'snapshot' about Australian people and households once every five years. The SLCD would provide the means to identify patterns of change in social and economic circumstances, for individuals and households over time. Insights might be gained into the relationship between peoples' social and economic situation over their life; their health outcomes; or the educational or economic outcomes of their children as they in turn grow to be adults.
The proposal does not involve the ABS keeping name and address information from the census. The ABS will continue to provide the same level of protection for the confidentiality of people's information as it has done for the past 100 years of its history.
No decision on this proposal has been made. Integral to the ABS decision on whether to proceed will be the level of community support. The paper calls for members of the public and other interested parties to submit their views on the proposal for ABS consideration.
Those wishing to provide feedback can lodge a submission on-line through the web site or on a paper form. To request a copy of the Discussion Paper or submission form, email email@example.com or call 1300 135 070.
The closing date for submissions is 10 June 2005. At the conclusion of the submission period, all the submissions will be carefully considered and the proposal will be reviewed in the light of the feedback received. An in-principle decision on whether to proceed will be made in late June 2005. The ABS will not proceed unless there is broad community support for the proposal.
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INCREASED AGE CUT OFFS FOR SELECTED SURVEYS
In response to the growing user interest in the older population, ABS has been reviewing its selection practices for enumerating supplementary topics in its Monthly Population Survey. While there are no upper age limits for the core labour force topics, there are such limits for some supplementary topics. The review assessed the impact of removing these cut-offs, taking into account data quality, respondent load and costs. As a result of the review the age scope for Labour Force Experience, Labour Mobility, Persons Not in the Labour Force and Education and Work have been increased to include all people aged 15 years and over.
For most topics, the numbers of people in the older age groups are expected to be small and, given the high sampling errors associated with estimates for age groups over 70 years, such estimates would probably only be published at an aggregate level. However, consideration is being given to publishing information for 10 or 15 year age groupings for the older age groups (either 65-80 and then 80 and over, or if there is sufficient sample, 65-75 and then 75 and over). Even though more detailed data may not be published because of quality concerns, it could be made available on request to those who might find it still useful.
ABS recognises the increasing importance of issues around ageing and recognises the need to improve the availability and accessibility of reliable information about people in older age groups. We will continue to consider these issues as we further develop the ABS survey program and put in place strategies for disseminating survey results.
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INFORMATION DEVELOPMENT PLAN (IDP)
The ABS has a continuing commitment to develop the quality of official statistical information and work collaboratively with a range of government agencies to deliver the statistics required by Australians. A major activity for the coming year is the compilation of the Information Development Plan(IDP). Shortly, two papers will be released in the first stage of the consultation process. The first will be a paper on the proposed process for the Ageing Information Development Plan. The second will be a paper which presents current thinking of the ABS on the Key Issues in Ageing.
In other IDP related activities, a recently released ABS Information Paper Key Issues Relating to Children and Youth (cat. no. 4908.0) is an attempt to identify the "key issues" relating to children and youth. The key issues are described in broad terms, along with a discussion of the policies, key questions and related key data sources.
The Information Paper has been written as a tool to engage stakeholders in the field of children and youth statistics. As such, it is designed to generate discussion among stakeholders so that the ABS can clarify the important (key) issues in this field as input to the development of the Children and Youth Information Development Plan.
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DID YOU KNOW?
At September 2004,
- there were 3.8 million persons aged 15 -69 years who were not in the labour force which represented 27% of the civilian population of this age.
- just under one third (31%) of those not in the labour force wanted to work.
- almost two thirds (65%) of total persons not in the labour force were female.
- in most ages groups there was a much higher proportion of females than males who were not in the labour force for example 46% and 24% respectively for females and males aged 55-59 years
- the exception was for those aged 15-19 years where 40% of males and 39% of females were not in the labour force
- the main reason as 'considered as too old by employers'.was reported by 34% of the 28,000 males and 32% of 54,000 female discouraged job seekers who did not actively look for work
For further details, refer to Persons Not in The Labour Force, Australia (cat. no. 6220.0), which was released on 11 March 2005.
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HR Executive Briefing - Workforce Ageing
Brisbane: 17 May Canberra: 19 May Sydney: 26 May Melbourne: 1 June
This half day workshop combines contemporary research and practical tools to provide actionable insight into the impact of ageing on workforce availability into the future. It reviews contemporary research on social change and workforce trends and the implications of these trends for workplace practices and HR strategies. Participants will use a model for understanding the direct impact of ageing on their business and will be provided with tools that use readily available workforce data to gain insight into the future workforce.
For further workshop details visit http://www.infohrm.com/Default.aspx
Emerging Researchers in Ageing Conference (ERA 2005 ) CALL FOR ABSTRACTS
The Australasian Centre on Ageing at the University of Queensland is pleased to invite PhD students to participate in the 4th Emerging Researchers in Ageing Conference to be held on Tuesday 8 November 2005. The theme of the conference will be “The Diversity of Ageing: Pooling the Evidence”. This year’s keynote speaker is Professor Hal Kendig, Research Professor of Ageing and Health at the University of Sydney, National Convener of the ARC-NHMRC Research Network on Ageing Well and Chair of the College Research Program in Ageing and Health.
For further conference details and to submit an abstract, please visit: www.uq.edu.au/ or contact (07) 3346 9084.
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NEW DATA RELEASES
1351.0.55.002 Research Paper: Modelling Languages Other Than English Spoken in Australia from Census Data, 2000-01 This paper presents the results from multivariate modelling analysis of non-English languages. The research aimed to construct a predictive model of languages spoken using other census responses such as Ancestry, Birthplace, and Religious Affiliation; to estimate the number of people who speak a language other than English at home in each statistical local area (SLA), using the model above; and to evaluate the models and assess the feasibility of reducing the language question.
1383.0.55.001 Measures of Australia's Progress: Summary Indicators, 2005 Presents the key 15 dimensions of Australia's progress. It provides a national summary of the most important areas of progress, presenting them in a way which can be quickly understood by all Australians. It informs and stimulates public debate and encourages all Australians to assess the bigger picture when contemplating progress.
3101.0 Australian Demographic Statistics, September 2004 This publication provides quarterly estimates of total population for states, territories and Australia. It includes the most recent estimates of the population in five-year age groups; numbers (and some rates) of births, deaths, infant deaths, interstate and overseas movements.
4430.0.55.002 Disability, Ageing and Carers, Disability and Long Term Health Conditions, 2003 Tables 12 to 19. This product providing further tables expanding on those in Disability, Ageing and Carers, Disability and Long Term Health Conditions (4430.0.55.001); particularly focussing on long term health conditions and disability groups for specific age groups. These spreadsheets use the Glossary and Explanatory notes from Disability, Ageing and Carers Australia: Summary of Findings (4430.0).
6105.0 Australian Labour Market Statistics, Australia This publication draws together data from a range of sources, mostly ABS household and business surveys, to provide an overall picture of the labour market. The key purpose of this publication is to raise awareness of the data available, so that users will be able to use it more effectively.
6202.0 Labour Force, March 2005, Australia This publication provides summary results of the monthly Labour Force Survey containing estimates of employed and unemployed persons classified by sex, full-time/part-time status, states and territories and some age groups; and persons not in the labour force.
6220.0 Persons Not in the Labour Force, Australia, September 2004 This publication provides details on persons who were not in the labour force. They are classified by whether they wanted to work, whether they looked for work in the last 12 months, reasons for not actively looking for work, main activity, time since their last job and details of that job. Characteristics of persons with marginal attachment to the labour force and discouraged jobseekers are provided. Estimates can be cross-classified by labour force demographics such as state, sex, marital status and birthplace.
6265.0 Underemployed Workers, Australia, September 2004 This publication provides information on visible underemployment. Persons who worked less than 35 hours in the week prior to the survey who would have preferred to work more hours were asked about whether they were looking for work with more hours, available to start work with more hours, and their experience in looking for work with more hours. Other information includes, the duration of the current period of insufficient work, and the number of extra hours preferred. Estimates can be cross-classified by labour force demographics such as state, sex, age, marital status and birthplace.
6354.0 Job Vacancies, Australia, February 2005 This publication contains estimates of the number of job vacancies with State and Territory and industry dissections.
For further enquiries on these ABS products please contact the National Information and Referral Service on 1300 135 070.
WHERE CAN YOU FIND US?
An Ageing theme page containing ageing-relevant information from the ABS and other Commonwealth Government agencies has been added to the ABS web site. The Ageing theme page highlights the type and range of data available for ageing analyses and will be updated to highlight new data releases as they become available.
NASU CONTACT DETAILS
Telephone: (07) 3222 6312
Telephone: (07) 3222 6206
National Ageing Statistics Unit (NASU)
Australian Bureau of Statistics
GPO Box 9817, BRISBANE QLD 4001
Fax: (07) 3222 6038
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This page first published 29 April 2005, last updated 24 April 2007