human capital

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Related to Human Capital Theory: Human Capital Management

human capital

the productive investment of resources in human beings rather than in plant and machinery In economics, such investment in human resources is appraised in comparison with levels of economic return from other kinds of investment. Clearly, investment in human capital begins in the family and continues in school and HIGHER EDUCATION, and is also affected by such inputs as provision for health care.

As a body of economic theory and associated empirical research, the human-capital theory of G. Becker, Human Capital (1975), explains income differentials as, in part at least, a return to human capital, e.g. the correlation between the number of years of formal education and earnings is so explained. The conclusion is often reached by human capital theorists that the returns to education are high. Similarly, POVERTY is sometimes explained as arising from a lack of human capital.

Challenges to the arguments of human-capital theory arise from a number of different sources, especially that the returns associated with education in fact arise from other sources, i.e. education may act merely as a filter or 'S creen’, and native ability or family background actually account for a significant proportion of the correlations between education and earnings (see SCREENING AND SCREENING HYPOTHESIS). Compare FUNCTIONALIST THEORY OF SOCIAL STRATIFICATION. see also CULTURAL CAPITAL.

References in periodicals archive ?
Human capital theory can be traced back to Adam Smith.
4) once remarked: "Because of the ambiguities that burden capital theory, we do well to bypass it, and rely on a theory of investment and the rates of return to investment opportunities." Accordingly, human capital theory deliberately avoided issues from the Knight-Hayek debate about what is gained and lost by treating capital as homogeneous rather than heterogeneous, and production as instantaneous rather than time-consuming (White 2016, pp.
Even if theories were used, authors tend to over-rely on a small number of theories (Resource-based view, learning theory, organization theory, Human Capital theory).
Human Capital theory has also failed to work, or at least to work in the way that people came to expect.
In human capital theory this knowledge formulates ethical, political and social activities of educating ourselves in terms of exchanges often associated with expected returns in the future.
The main difference of the results from other studies of human capital factors is the ability to take into account the factors that correspond to the fundamental principles of the human capital theory and current trends in the labour market, but have no formal statistical expression.
Applying Human Capital Theory to the study of poverty, the income increase produced by investments in human capital decreases the probability that workers may find themselves living in poverty.
Human capital theory is often discussed together with social capital theory (e.g., Barros & Barros, 2005; Sagas & Cunningham, 2005).
One of the significant methods to examine the "observed" part is the human capital theory. Human capital theory is an important theory of labour economics that studies impact of different "human-capital" variables (such as work-experience, education and training variables) on the wage-rates.
Commonly associated with the work of Becker (1964), human capital theory idealises the labour market insofar as individual differences in terms of access and rewards are linked, among other factors, to higher levels of education and skill.
Human capital theory predicts that higher education increases the likelihood of higher wages.
Different theories have been propounded to describe the economic nature of education; according to the human capital theory, education is a production factor and a specific sort of capital, while conflict theory views education as a mean to maintain social inequality and preserving the power of those who dominate society, whereas filter theory maintains that education is a tool to make selection because it informs about the amount and quality of human capital, whereas signal theory considers education as meaningful information about certain level of ability of an individual but gives no information about the productivity.

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