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Human capital has a substantial impact on individual earnings. [2] Research indicates that human capital investments have high economic returns throughout childhood and young adulthood. [2] [3] Companies can invest in human capital; for example, through education and training, improving levels of quality and production. [4]
The Uzawa–Lucas model is an economic model that explains long-term economic growth as consequence of human capital accumulation. Developed by Robert Lucas, Jr., [1] building upon initial contributions by Hirofumi Uzawa, [2] it extends the AK model by a two-sector setup, in which physical and human capital are produced by different technologies.
Schultz coined this theory in his book titled Investment in Human Capital; however, he experienced negative feedback from other economists. He states that knowledge and skill are a form of capital, and investments in human capital leads to an increase in both economic output and workers' earnings.
Human development theory is a theory which uses ideas from different origins, such as ecology, sustainable development, feminism and welfare economics. It wants to avoid normative politics and is focused on how social capital and instructional capital can be deployed to optimize the overall value of human capital in an economy.
Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. The theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run ...
Human Capital Theory states that the knowledge, experience and skills of employees are developed through processes of advanced education, training and development and job changes (Tharenou, 1997). Human capital acquisition through learning and job satisfaction increases the ability of a workforce to perform effectively (Michael et al., 2000 ...
It has been used as an input for testing theories explaining the distribution of income, for example human capital theory and the theory of economic discrimination (Becker, 1993, 1971). In welfare economics, a level of feasible output possibilities is commonly distinguished from the distribution of income for those output possibilities.
The Human Capital Index (HCI) is an annual measurement prepared by the World Bank. [1] HCI measures which countries are best in mobilizing their human capital, the economic and professional potential of their citizens. The index measures how much capital each country loses through lack of education and health.