Lab 6A

Human Capital and Per Capita Income

Assignment

This lab investigates the relationships between a country’s stock of human capital and income per capita. The data is available in Excel or Stata format on the textbook web page.

1.  Describe the variation in education levels and health that you see across countries. What is the minimum life expectancy in 2005? The maximum? The average? What is the minimum level for the average years of education in 2005? The maximum? The average? When you graduate from college, how many years of education will you have above the average in your country?

2.  Make a scatter plot of the relationship between the average years of education and per capita income in 2005. What relationship do you observe? Do countries with more education have higher incomes?

3.  Make a scatter plot of the relationship between the average years of education in 1970 and the growth rate of income per capita between 1970 and 2005. How does the relationship shown in this graph differ from the one shown in your answer to question 2? Do the two graphs, one showing the relationship between the level of education and the level of income and one showing the relationship between the level of education and the growth of income, represent different ideas and support different theories about the impact of education on the standard of living? Explain.

4.  Make a scatter plot of the relationship between infant mortality and the level of income. What relationship do you see? Do countries with lower rates of infant mortality have higher incomes?

5.  Make a scatter plot of the relationship between life expectancy in 2005 and income per capita in 2005. Explain the relationship you see. Refer back to the discussion in your textbook regarding the two views on health and income per capita and discuss whether or not your graph provides evidence that greater health causes higher income.

6.  Using your results from questions 1 through 5, discuss any policy recommendations you have for countries wanting to have higher income per capita in the future.