Appendix M: human capital costs

The social cost of premature death or emigration of persons of working

age is calculated as the loss to society of what was invested in rearing
and educating them prior to entry into the workforce. Tables M.I and
M.2 deal with average rearing and education costs in 1940, at 1940 ruble
prices. In table M.I, total household consumption is compared with the
population of adults and children. It is assumed that adult consumption
per head was three times a child's, since children lacked either indi-
vidual purchasing power or control over family resources. This sug-
gests a figure of 589 rubles as the annual average rearing cost of a child
in 1940 which, multiplied by 15 years of preparation for entry into the
workforce, leads to 8,839 rubles for the total rearing cost of a member of
the workforce in 1940.
Table M.2 deals with education costs in a similar way. In 1940, 22.5
billion rubles were spent on educating 40 million persons at all levels of
the state education system. The average education costs per person were
therefore 562 rubles. It is assumed that seven years was the average edu-
cational experience of a person of working age in 1940; some (for
example, university graduates) had more, of course, but many (espe-
cially those of rural origin or of the older generation) had less. The
average cost multiplied by seven years suggests a figure of 3,935 rubles
for the total education cost of a member of the workforce in 1940.
The total sum invested by society in each member of the 1940
working population was therefore 12,774 rubles.
In table M.3 the number of premature war deaths among people of
working age is given as either 19 or 21 million (dependent upon alter-
native resolutions of the Maksudov dilemma). In addition, there was
net wartime and postwar emigration of roughly 2.7 million people,
among whom I assume 2 million were of working age, making 21 or 23
million people in total. These, multiplied by the average sum invested
by society in each person, put the total cost of premature war deaths at
either 268 or 294 billion rubles at 1940 prices.
292

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 Appendices 293

Table M.I. Rearing costs, 1940

1 Household consumption, 1940, billion rubles 260.8

2 Total population, 1940, million 192.6
2.1 adults 125.0
2.2 children (0-14 years) 67.6
3 Adult:child differential 3
4 Annual cost per child, rubles 589
5 Years of rearing 15
6 Total rearing cost per person, rubles 8839

Sources: Row 1: Bergson (1961), 46. Rows 2,2.1,2.2: Andreev et al. (1990a),
46. Row 3: see text. Row 4: row 1, divided by the population (row 2) in
child-units (the sum of rows 2.1 multiplied by row 3, and row 2.2). Row 5:
see text. Row 6: row 4, multiplied by row 5.

Table M.2. Education costs, 1940

1 Education budget, 1940, billion rubles 22.5

2 Numbers in education, 1940, million 40.0
3 Annual cost per person, rubles 562
4 Years of education 7
5 Total education cost per person, rubles 3935

Sources: Row 1: Plotnikov (1955), 264. Row 2: TsSU (1977), 7 (numbers in

pre-school, primary, secondary, higher, and vocational education). Row 3:
row 1, divided by row 2. Row 4: see text. Row 5: row 3, multiplied by row 4.

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 Appendices 294

Table M.3. The cost of wartime demographic losses, 1941-5

(1) (2)
(A) Population aged 15-64 years
1 Prewar population, million 116.6 118.6
2 Premature deaths, million 19.0 21.0
3 Net emigration, million 2.0 2.0
4 Wartime demographic loss, million 21.0 23.0
4.1 % of prewar population 18.0% 19.4%
(B) Rubles at 1940 prices
5 Cost per person in 1940, rubles 12774 12774
6 Total cost of war losses, billion rubles 268 294

Sources: Row 1: Andreev et al. (1990a), 46; there are two variants, depending
on how we resolve the Maksudov dilemma. Col. 1 shows the unadjusted
prewar population figure reported by Andreev et ah, combined with a figure
for war deaths adjusted downward by estimated net wartime and postwar
emigration of 2 million. Col. 2 shows a prewar population figure adjusted
upward to include 2 million wartime and postwar emigrants of working age,
and an unadjusted figure for war deaths. Rows 2,3: the number of excess
wartime deaths among persons of working age is estimated as follows.
Andreev et al. (1990b), 26-7, supply two benchmarks. An upper limit is the
25.3 million war deaths amongst the population born before mid-1941 (but
this includes many who were too old or too young to enter the working
population). A lower limit is the 16.7 million war deaths among those born
between 1901 and 1931 (but this figure excludes those aged 45-64, who were
also part of the working population). A simple, if crude expedient would be
therefore to take the midpoint of the range, i.e. 21 million, for war deaths
amongst the working-age population. But where are the 2.7 million net
emigrants? Col. 1 assumes that they are concealed within war deaths as
estimated by Andreev et al. I assume that 2m emigrants were of working age,
reducing the 21 million war deaths amongst the working-age population to 19
million. Col. 2 assumes that the prewar population reported by Andreev et al.
has been adjusted downward to eliminate net wartime and postwar
emigration, and makes no adjustment to the 21 million. These correspond to
the assumptions generating cols 1 and 2 in table 7.2. Row 4: the sum of rows
2,3. Row 4.1: row 4, divided by row 1. Row 5: table M.I, row 6, plus table
M.2, row 5. Row 6: row 5, multiplied by row 4.

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