Recap

Key ideas of the chapter, pulled together:

• Investment in education turns human beings into human capital. Human capital stands for enhanced labour productivity, an acquired ability that results from deliberate investment decisions made in the expectation that it will raise future income.
• The sources of human capital formation are investment in education, on-the-job training, health, migration and information.
• The idea of physical capital is the base for understanding human capital. The two forms of capital share some similarities but also differ in important ways, in tangibility, mobility, separability from the owner, the nature of their depreciation, and the fact that human capital yields social as well as private benefits.
• Investment in human capital formation is regarded as efficient and growth-enhancing.
• Human development is a broader idea than human capital. It rests on the view that education and health are integral to human well-being in themselves, because only when people can read and write and lead long, healthy lives can they make the other choices they value. …