Measuring human capital in South Africa across socioeconomic subgroups using a latent-variable approach

Abstract Human capital is a complex concept to measure given it an unobserved latent construct. Education fundamental dimension of human and thus education-based approach the one most widely used. However, international literature recommends latent-variable measuring capital. This study aims in South Africa, country experiencing extreme earnings education inequalities, using National Income Dynamic Study (NIDS) dataset. The findings are that parental associated with largest amount variance (latent) capital, while health indicator captures least variance. Furthermore, variable provides valuable profile distribution by socioeconomic subgroups.