What is human capital?


Human capital is intangible and built in the body and mind of its owner. Whether a human being wants to raise the earnings depends on his/her inner conscience. It cannot be sold, but only its services can be sold in the market. It creates both private and social benefits.

Human capital

Differences between Physical and Human Capital

Physical CapitalHuman Capital
It is tangible.It is intangible, built in the body and mind of its owner.
It is separable from its owner and can be sold in the market.It cannot be sold, but only its services can be sold in the market.
It is completely mobile between countries, barring
some artificial trade restrictions.
It is not perfectly mobile and is restricted by
It can be built through imports and creates only
private benefits.
It depends on a person’s conscience as to whether he/she wants to raise earnings. It creates both private and social benefits.

It plays an important role in economic development. It is required to use physical capital more productively. We also need human capital to produce other human capital such as doctors, lawyers and engineers. Investment in human beings helps to produce more human capital. This enables us to increase the work participation rate and greater the level of output.

Role of Human Capital in Economic Development in details – Read here

Improvement in Human Capital

The main aim of human capital formation is to make the human beings in a nation more productive. Expenditure on education and health was incurred through the three tiers of the government—union government, state government and local government.

Women and Child Welfare

According to Census 2001, women constitute 48% of the Indian population and women workers constitute 33.3% of all workers. Discrimination against women is very common in the labour market of less developed and developing countries. Women enjoy fewer rights than men in a developing economy. Violence against women is also one of the serious problems in an economy. These discriminations
against women are called gender-based discriminations in society.

Empowerment of Women

The social return from educating women is higher than that from educating men. It helps in not only improving the work efficiency of women but also improving child health by improving the mother’s literacy. According to the United Nations and World Bank, the education of women is one of the most cost-effective means of improving local health conditions. Proper education and training would empower women to take leadership roles in various fields of social and economic activities.

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