Pietro Giorgio Lovaglio

The aim of the present paper is to generalize the definition of Human Capital (HC) as unidimensional latent variable (LV) to the case of bidimensional LV composed by an ‘‘Educational dimension’’ and a ‘‘Working experience dimension’’ underlying the process of determination and accumulation of earned Income and capital Income. In particular we propose an extended version of the statistical definition of HC (part 2), coherent with the economic theory and major studies that have proposed HC indicators (part 3); then, in order to overcome the limits of classical approaches, an estimation method that provides standardized LV (part 4) and an actuarial approach that obtains HC scores in monetary values are proposed (part 6) and applied to the estimation of the Italian household HC in 2000 (part 5). Then, to investigate relations between HC and other relevant economic variables for household, a structural model is specified and estimated (part 7). Final section draws major conclusions (part 8).