What is human capital in economics?

In economics, “capital” refers to all of the assets a business needs to produce the goods and services it sells. In this sense, capital includes equipment, land, buildings, money, and, of course, people—human capital. In a deeper sense, however, human capital is more than simply the physical labor of the people who work for an organization.

What is human capital theory?

In a larger sense, the various elements needed to create an adequate supply of available labor form the basis of human capital theory and are critical to the economic and social health of the world’s nations. In economics, “capital” refers to all of the assets a business needs to produce the goods and services it sells.

Is human capital a means of production?

Thus, human capital is a means of production, into which additional investment yields additional output. Human capital is substitutable, but not transferable like land, labor, or fixed capital. Some contemporary growth theories see human capital as an important economic growth factor.