Theory of Human Capital

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Theory of Human Capital

What’s Human Capital?
Human capital refers to the stock of competences, knowledge and personality attributes combined altogether to perform labour so as to produce economic value. It is the attributes gained by a worker through education and experience.


Economists views on Human Capital
The set of skills possessed by the worker of the company Development of skills is an important factor in production activities Human capital model reveals that investment in education has a positive correlation with economic growth and development Economists regard education as both consumer and capital good *

What about research…
Adam Smith (1776), Jean Baptiste Say (1821), John Stuart Mill (1909), William Roscher (1878) and Henry Sidgwick (1901): were early contributors to the literature on human capital economics by suggesting in various ways that human beings are an investment which generates a return Many other early researchers recognized the concept but refused to consider people in the same way as physical commodities due to what has been termed “sentimentalism.”

Most recent survey…
Schultz (1960): the quality of the workforce was a variable element in the economy and could be improved to increase the human variable in the economic equation, and therefore increase productivity. Becker (1964): the investment in knowledge, skills and health would not only benefit the individual; it could also increase an employer’s or country’s human capital resource pool and potential productivity. Both were awarded the Nobel Prize in Economic Sciences *

Human Capital refers to…
Competence Knowledge

EDUCATION Investment Ability


Education & Skills
Education increases the productivity and efficiency of workers by increasing the level of cognitive stock of economically productive human capability Human Capital is the concept that acquisition of more knowledge and skills raises the value of a person’s human capital,...
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