| Abstract | How to measure human capital? Among different growth models, which one could be more suitable for Chinese economy? Among different types of human capital, which one could provide explanation for the growth of China’s economy? How to set up the Aggregate Production Function that incorporates human capital? It is important to provide a reasonable explanation for these questions, since they are vital and fundamental for understanding human capital. On summarizing and reviewing the existing research literatures on measurement of human capital, this paper improves the cost-based approach from a new perspective. Based on this framework, we measure China’s human capital from 1952 to 2007, and get multiple series of data based on recessive human capital and conspicuous human capital. The result shows that China’s economy has two types of characteristics：namely, non-decreasing marginal productivity of capital, and the rate of investment that has a positive association with the rate of economic growth. AK growth model is suitable for China’s economy. In explaining economic growth, the results from tests for productivity function show that the variables of years of education and conspicuous human capital are not significant; AK productivity function is effective, and when human capital is introduced, we further demonstrate this conclusion; and share of contribution to GDP from material capital and human capital account for about 50 percent, respectively. |