Analysis and projection of the Human Capital Index using the DYNAMIS-POP micro-simulation model

This note outlines how the DYNAMIS-POP micro-simulation model can be used for human capital projections and related analysis. The newly introduced World Bank Human Capital Index (HCI) addresses the incentive problem of investments in human capital where returns are slow. HCI is "designed to highlight how investments that improve health and education outcomes today will affect the productivity of future generations". Microsimulation is a specifically powerful tool for the analysis of systems and policies with such a strong longitudinal component. We use DYNAMIS-POP for Nepal highlighting how micro-simulation can inform policy analysis and project the impact of observed socio-demographic and education changes on the HCI.

Date: October 2018

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