Quantifying Experience in the Value of Human Capital.
Abstract
The present study will attempt to place a dollar value on human capital gained through training and work experience. Specifically, this study will quantify the value of human capital Air Force officers. In order to calculate the value of an individual to an organization one must first determine their productivity. A model for calculating this productivity for an Air Force officer has been developed. This productivity model for the Air Force is based upon the following assumptions: (1) and individual's productivity is an increasing function of his/her years of service, and increase at a decreasing rate, (2) over the lifetime of employment of the individual, the Air Force realizes total returns equal to total expenditures on the individual for compensation and training. Having developed a productivity vs. time profile for a particular Air Force job, the Human Capital Value of a person at a particular time can be determined by taking the present discounted value of future returns minus costs plus the replacement costs for that individual (hiring, training and experiencing costs). Actual results of the model can be developed by analyzing individual Air Force job titles. Training costs, compensation and expected retirement costs are used to develop productivity profiles for these different jobs. Value of an individual's human capital can then be determined from any point in the person's career to any time in the future. Policy implications concerning compensation and other personnel programs can then be made to optimize the structure of the officer corps in the Air Force.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 1987
- Accession Number
- ADA186585
Entities
People
- Russell T. Roth
Organizations
- United States Air Force Academy