# Updating MRW (1992) with PWT 9.0

I'm trying to rework Mankiw, Romer, Weil (1992) with fresh data.

From their paper:

n: workforce growth rate

We measure n as the average rate of growth of the working-age population, where working age is defined as 15 to 64.

s: rate of savings

We measure s as the average share of real investment (including government investment) in real GDP...

Y/L: output per worker

...and Y/L as real GDP in 1985 divided by the working-age population in that year.

They also assume...

... that g+δ=0.05

As for human capital:

We use a proxy for the rate of human-capital accumulation (Sh) that measures approximately the percentage of the working-age population that is in secondary school. We begin with data on the fraction of the eligible population (aged 12 to 17) enrolled in secondary school, which we obtained from the UNESCO yearbook. We then multiply this enrollment rate by the fraction of the working-age population that is of school age (aged 15 to 19).

Considering the latest version of the Penn World Tables, should I use emp and the corresponding growth rate for n, rgdpo/emp for Y/L, and hc for human capital (Sh)? What about s? I'm a little perplexed as MRW include government investment.

Excerpt from the PWT 9.0 legend for convenience.

Real GDP, employment and population levels

rgdpe Expenditure-side real GDP at chained PPPs (in mil. 2011US$) rgdpo Output-side real GDP at chained PPPs (in mil. 2011US$)

pop Population (in millions)

emp Number of persons engaged (in millions)

avh Average annual hours worked by persons engaged

hc Human capital index, based on years of schooling and returns to education; see Human capital in PWT9.

Current price GDP, capital and TFP

ccon Real consumption of households and government, at current PPPs (in mil. 2011US$) cda Real domestic absorption, (real consumption plus investment), at current PPPs (in mil. 2011US$)

cgdpe Expenditure-side real GDP at current PPPs (in mil. 2011US$) cgdpo Output-side real GDP at current PPPs (in mil. 2011US$)

ck Capital stock at current PPPs (in mil. 2011US$) ctfp TFP level at current PPPs (USA=1) cwtfp Welfare-relevant TFP levels at current PPPs (USA=1) National accounts-based variables rgdpna Real GDP at constant 2011 national prices (in mil. 2011US$)

rconna Real consumption at constant 2011 national prices (in mil. 2011US$) rdana Real domestic absorption at constant 2011 national prices (in mil. 2011US$)

rkna Capital stock at constant 2011 national prices (in mil. 2011US$) rtfpna TFP at constant national prices (2011=1) rwtfpna Welfare-relevant TFP at constant national prices (2011=1) labsh Share of labour compensation in GDP at current national prices delta Average depreciation rate of the capital stock Shares in CGDPo csh_c Share of household consumption at current PPPs csh_i Share of gross capital formation at current PPPs csh_g Share of government consumption at current PPPs csh_x Share of merchandise exports at current PPPs csh_m Share of merchandise imports at current PPPs csh_r Share of residual trade and GDP statistical discrepancy at current PPPs • Was my answer satisfactory? – luchonacho Aug 23 '17 at 12:23 ## 1 Answer Your assumptions seem correct. For savings rate, the consistent definition with MRW would be $$\frac{ccon - cda}{cgdpo}$$ ccon is domestic absortion, equal to$ C + G+ I$, whereas cda is$C+G$. Therefore,$I\$ is investment, which by definition includes both private and public sector.

• Thank you. What about human capital though? There's a different calculation. SCHOOL in MRW is the % of working age population in secondary school. In PWT the human capital index is based on the "average years of schooling from Barro and Lee (BL, 2013) and an assumed rate of return to education, based on Mincer equation estimates around the world (Psacharopoulos, 1994)". – inquirius May 2 '17 at 13:14
• Well, my answer was based on my perhaps incorrect assumption that you only wanted to use PWT data. Then, hc is your only choice. But yes, it is not the same. Your alternative is to use external data. You could use Barro and Lee data, or World bank data. See here for more data sources). – luchonacho May 2 '17 at 13:42