Overview of human capital estimates in the UK: 2004 to 2020

• In 2020, the UK's full human capital stock, as measured by the projected lifetime earnings of working age people, was worth £23.8 trillion.

• Annual growth of the UK's total lifetime earnings was 1.2% in 2020, the strongest growth seen since 2011.

• In 2020, the UK's lifetime earnings per head also grew annually by 1.2% to £566,000.

• Total lifetime earnings grew in 2020 mainly because of an increase in educational attainment – 1.2 million more people had a PhD, master's or undergraduate degree (or equivalent) as their highest qualification level when compared with 2019.

• Women's total lifetime earnings increased by 8.6% in 2020 when compared with 2010 (now accounting for £9.2 trillion), while men's total lifetime earnings increased by 6.5% over the same period.

In this analysis, human capital is measured through people's projected lifetime earnings. More generally, human capital is a measure of the "knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being" – read more in the OECD Executive Summary, The Well-being of Nations: The Role of Human and Social Capital (PDF, 292KB). The value of the UK's full human capital stock, accounting for the human capital of people who are either employed or unemployed, was £23.8 trillion in 2020. This was a 1.2% increase in real terms when compared with 2019, and is the strongest annual growth since 2011.

The increase in total lifetime earnings can be mainly explained by the rise in the number of working age people (those aged 16 to 65 years) with at least an undergraduate degree or equivalent as their highest level of qualification. It is worth noting that an individual with a higher educational attainment will have higher lifetime earnings, on average, than if that same individual had a lower educational attainment. In 2020, the number of working age people with a master’s or PhD qualification grew by 10.9% to 5.1 million when compared with 2019. Similarly, the number of people whose highest qualification was an undergraduate degree or equivalent grew by 7.5% to 9.4 million over the same period.

Further data on human capital stocks, including contributions to total lifetime earnings split by age, sex and highest qualification level, can be found in the associated data tables. Fuller analysis of trends, including regional information, will be provided later in 2022.

Updates to methodology

Our previous core methodology can be found in our Measuring the UK’s Human Capital Stock methodology guidance (PDF, 208KB). This involved calculating earnings by age, sex and highest qualification level, where highest qualification level was grouped into six levels including "Degree or equivalent". We have now adjusted the core methodology so that "Degree or equivalent" is separated out into "Undergraduate degree or equivalent" and "Master's degree or PhD". This followed on from experimental work in our last release that derived this for the first time. This adjustment allows us to see the lifetime earnings premiums for those with undergraduate degrees and master's/PhD level qualifications separately and will also improve the measurement of our human capital stock value.

We have additionally moved to using the Törnqvist index to more accurately measure how real human capital changes over time. For further recent updates to our methodology, see the Methodology developments section of our Human capital estimates in the UK: 2004 to 2018 article.

Full and employed human capital

Full and employed human capital estimates are provided in this bulletin. Full human capital estimates assume that unemployed people have the same lifetime earnings as those who are employed with the same age, sex, and highest qualification, whether they are currently employed or not. Under employed human capital methodology, those who are unemployed are assumed to have zero human capital. In both full and employed human capital estimates, inactive individuals (those not seeking work) are assumed to have no human capital. We refer to full human capital estimates in this release, unless stated otherwise.

As outlined in our Measuring the UK's Human Capital Stock methodology guidance (PDF, 208KB), there are several assumptions that go into deriving human capital stocks through projected lifetime earnings.

One assumption of the current human capital methodology is that future trends are projected from current-year trends. This could be seen as a limitation in 2020, because of the coronavirus (COVID-19) pandemic's effect on earnings and mortality rates. We therefore adjusted individuals' earnings and the mortality rates that are projected forward so that they better reflected the levels seen before the coronavirus pandemic. These adjusted earnings and mortality rates were used to calculate projected lifetime earnings, which were then compared with the estimates that used the original methodology. This analysis showed little difference between the estimates derived from the original and adjusted methods, and as a result we have not changed the methodology in 2020. Data tables showing this analysis can be found in our supplementary tables.