HUMAN CAPITAL
THE DEFINITION
Capital is money or a financial asset invested for the purpose of making more money (whether in the form of profit, rent, interest, royalties, capital gain or some other kind of return).
TERMS Human resources is the set of individuals who make up the workforce of an organization, business sector or an economy. Workforce is used to describe those working for a single company or industry, but can also apply to a geographic region like a city, country, state, etc. Human capital typically refers to a more narrow view; i. e. , the knowledge the individuals embody and can contribute to an organization.
HISTORY of a TERM William Petty (1623— 1687) «Advice for the advancement of some particular parts of learning» (1646), «Essays in political arithmetic» Adam Smith (1723 – 1790) defined human capital as follows: “Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society. 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. Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, and which, though it costs a certain expense, repays that expense with a profit. ”.
David Ricardo (1772 -1823) 1958: Jacob Mincer's article "Investment in Human Capital and Personal Income Distribution" in The Journal of Political Economy in. 1960 -s: T. W. Schultz & G. Becker (were awarded the Nobel Memorial Prize in Economic Sciences in 1979 & 1992) WHY IN 1960 -s?
Human capital is the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. Human capital is vitally important for an organization's success Human capital costs a certain expense, repays that expense with a profit
KEY ASSETS Health Education Mobility/ Migration
"specific" and "general" human capital Specific refers to skills or knowledge that is useful only to a single employer or industry, General human capital is useful to all employers.
1. 2. Corresponding Providing 3. Maximizing
NB! accumulation of capital is the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. New education and training increasing the skills of the (potential) labour force which can increase earnings from work.
Practice Investments into your Human Capital Gary Becker(a Nobel laureate in 1992) used the economic approach to human behavior. The economic approach - the hypothesis of rational expectations, according to which people in decisionmaking use the principles of economic efficiency. People usually choose the decisions that will yield them benefits.