The Office for National Statistics (ONS) has for over 10 years produced annual stock
estimates of human capital assets, in real and nominal terms with a variety of demographic
decompositions. Similarly, most published papers from both academic and national
statistical institutions have focused on the production and analysis of human capital stock
estimates. This paper looks to move beyond this by considering the economic flows
associated with incorporating human capital assets into the UK Economic Accounts within
the context of an experimental satellite account; thereby explaining the movement between
two human capital stock positions and the resulting effect on the main national accounts
aggregates such as gross value added, savings, net worth, etc. In doing this we draw on
the UNECE Guide to measuring human capital (UNECE; 2016) and the examples of the
Human Capital Accounts produced by Canada and the United States, as its starting points
for integrating the “production” of human capital assets into the economic accounts and
then looks at extending that to include the production of services arising from those human
capital assets by looking at parallels with how the System of National Accounts treats other
produced assets used within a production process where the economic ownership of the
asset resides with another institutional unit. This constitutes a key contribution to the
existing body of work, and the estimates presented here are the first of their kind for the UK
and demonstrates the importance of human capital assets for the economic accounts due
to their magnitude in comparison with current total non-financial assets on the UK balance
sheet; on average human capital assets are 220% of total non-financial assets for the
reference period 2005-2018.
