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THE ACCOUNTING TREATMENT OF HUMAN INVESTMENT AND CAPITAL
Author(s) -
Kendrick John W.
Publication year - 1974
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1974.tb00927.x
Subject(s) - economics , human capital , return of capital , physical capital , rate of return , investment (military) , national income and product accounts , labour economics , return on investment , fixed investment , capital deepening , cost of capital , return on capital , return on capital employed , national accounts , investment performance , capital formation , financial capital , macroeconomics , finance , microeconomics , production (economics) , economic growth , incentive , politics , political science , law
Defining investment as outlays that increase income‐ and output‐producing capacity, the author presents estimates of human investment in the United States 1929–69, comprising rearing costs, education, training, health, safety and mobility outlays. He develops an economic accounting framework to accommodate human investments and research and development in national and sector capital accounts, with appropriate adjustments to the current accounts to provide consistency. The associated balance sheets and wealth statements are also developed. The wealth and corresponding income estimates are used to compute rates of return on human, non‐human, and total capital. In the business economy the average net rate of return on total capital was 10.6 percent in 1969, compared with 10.0 percent in 1929. The average and marginal rates of return on human capital were generally somewhat higher than on non‐human capital throughout the period.