Human capital
[2] Research indicates that human capital investments have high economic returns throughout childhood and young adulthood.
[6]But the term only found widespread use in economics after its popularization by economists of the Chicago School, in particular Gary Becker, Jacob Mincer, and Theodore Schultz.
[7] The use of the term in the modern neoclassical economic literature dates back to Jacob Mincer's article "Investment in Human Capital and Personal Income Distribution" in the Journal of Political Economy in 1958.
[10] Adam Smith defined four types of fixed capital (which is characterized as that which affords a revenue or profit without circulating or changing masters).
The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person.
In the 1990s, the concept of human capital was extended to include natural abilities, physical fitness and healthiness, which are crucial for an individual's success in acquiring knowledge and skills.
These resources are the total capacity of the people that represents a form of wealth that can be directed to accomplish the goals of the nation or state or a portion thereof.
It was assumed in early economic theories, reflecting the context – i.e., the secondary sector of the economy was producing much more than the tertiary sector was able to produce at the time in most countries – to be a fungible resource, homogeneous, and easily interchangeable, and it was referred to simply as workforce or labor, one of three factors of production (the others being land, and assumed-interchangeable assets of money and physical equipment).
In general, these analyses acknowledge that individual trained bodies, teachable ideas or skills, and social influence or persuasion power, are different.
[24][25] In 2010, the OECD encouraged the governments of advanced economies to embrace policies to increase innovation and knowledge in products and services as an economical path to continued prosperity.
[28] In October 2018, the World Bank published the Human Capital Index (HCI) as a measurement of economic success.
One of the central innovations of the World Bank Human Capital Index was the inclusion and harmonization of learning data across 164 countries.
The learning outcomes data, methodology, and applications to the human capital literature underlying this effort were published in Nature.
[33] Measuring the human capital index of individual firms is also possible: a survey is made on issues like training or compensation,[34] and a value between 0 (worst) and 100 (best) is obtained.
[34] Human capital management (HCM) is the term used to describe workforce practices and resources that focus on maximizing needed skills through the recruitment, training, and development of employees.
[35][36] Departments and software applications responsible for HCM often manage tasks that include administrative support, reporting and analytics, education and training, and hiring and recruitment.
In recent economic writings the concept of firm-specific human capital, which includes those social relationships, individual instincts, and instructional details that are of value within one firm (but not in general), appears by way of explaining some labour mobility issues and such phenomena as golden handcuffs.
But long before Mincer or Becker wrote, Marx pointed to "two disagreeably frustrating facts" with theories that equate wages or salaries with the interest on human capital.
[41] Neo-Marxist economists have argued that education leads to higher wages not by increasing human capital, but rather by making workers more compliant and reliable in a corporate environment.
When wage costs are applied to this difference (the 8,000 hours) it becomes possible to financially value human capital risk within an organizational perspective.
[20][21][22] Some labor economists have criticized the Chicago-school theory, claiming that it tries to explain all differences in wages and salaries in terms of human capital.
The concept of human capital can be infinitely elastic, including unmeasurable variables such as personal character or connections with insiders (via family or fraternity).
This theory has had a significant share of study in the field proving that wages can be higher for employees on aspects other than human capital.
Some variables that have been identified in the literature of the past few decades include, gender and nativity wage differentials, discrimination in the work place, and socioeconomic status.
