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Very Short Answer Questions · Q2

Q.What is Human Capital?

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✓ Free question

Human capital is the economically productive value embodied in a population as a result of investment in education, health, training, migration and access to information. It differs from the raw idea of "human resource", which is simply a headcount of the working-age population, because human capital emphasises the quality — the skills and health — of that population rather than its size alone.

Major sources of human capital formation include: expenditure on education (schooling and higher education), expenditure on health (nutrition, sanitation, public health), on-the-job training and vocational skilling, migration in search of better employment, and expenditure on acquiring labour-market and health information. Because human capital is built up through deliberate spending with a future productive return, economics treats spending on education and health as investment, in the same sense as spending on machinery or buildings.

✓Final answer

Human capital is the productive stock of skill, education, training and health that a population possesses as a result of deliberate investment — it is what turns a large population into a genuinely productive workforce.

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