Identification and Social Welfare Decomposition of Human Capital Sources of Well‐being in Cameroon

This study investigates the role of human capital on household economic well‐being and studies the social welfare of human capital along sectors of employment in Cameroon. Specifically, it (1) estimates a well‐being generating function, (2) studies the relative importance of efficiency and equity in human capital social welfare decomposition and (3) assesses the implications of employment sector‐based marginal improvements in human capital for targeting purposes in the context of social welfare maximization. The 2007 Cameroon household consumption survey, the 2SLS econometric method and a generalized Sen‐social welfare decomposition framework inform the empirical strategy. Results show that the efficiency component is more potent in accounting for social welfare than the equity component, and sectors with higher human capital shares influence social welfare more than sectors with lower human capital shares. Pilot human capital interventions, if targeted on the tertiary sector workers, would generate spillover effects to the rest of the economy in terms of social welfare maximization that mediates between equity and efficiency considerations.