Estimating Human Capital Misallocation Using a Panel Variable Coefficient Model with Time-Varying Intercept and Slope

A panel variable coefficient model incorporating a time-varying intercept and slope is employed to estimate the aforementioned equation, which is subsequently utilized to derive the human capital misallocation indicator in accordance with equation (7). The resulting indicator is subjected to an absolute value transformation, whereby a greater value indicates a more pronounced degree of misallocation. Specifically, a negative relationship between the explanatory and explained variables is indicative of an improvement in human capital allocation.