Main Messages

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Human Capital: Global Trends and the Impact of the COVID-19 Pandemic

Kenan Karakulah, Glenn-Marie Lange, and Esther Naikal

Main Messages

• Human capital—estimated as the present value of future earnings for the labor force, employed and self-employed—is the largest asset across all income groups, constituting 64 percent of total wealth in 2018, slightly higher than in 1995. • Slower annual wage growth in high-income countries (roughly 1 percent) combined with aging of the labor force reduced their share of global human capital, while higher rates in some middle-income countries (up to 4 percent) increased their relative share. • Significant disparity between male and female human capital persists across most regions and income groups, with great variation among regions: by 2018, females held 44 percent of human capital in Latin America and the Caribbean but only 13 percent in South Asia. • Although the full, long-lasting effects of the COVID-19 pandemic are still unknown, the resulting economic downturn and associated unemployment and loss of earnings have already set back the long-term trajectory of poverty reduction. As a share of human capital, Sub-Saharan Africa and South Asia have suffered the greatest setbacks, losing 13 and 6 percent of their human capital, respectively.