Human Capital Formation

Human  Capital  Formation:  How  people  become  resource;  Role  of  human  capital  in economic  development;  Growth  of Education  Sector in India  

HUMAN CAPITAL

Human capital refers to the stock of skill, ability, expertise, education and knowledge in a nation at a given point. 

HUMAN CAPITAL FORMATION

It is the development of abilities and skills among the population of the country

OR

Addition in the stock of human capital is known as Human Capital Formation.

How  People  Become  Resource /Sources of Human Capital Formation: 

1) Expenditure on education: 

Proper utility of man power depends on the system of education of the people.Investment in education is not only highly productive but also it is yields increasing return.

2) Expenditure on Health: 

Health is an important input for a development of a nation. It directly increases the physical capacity of human being and it raises the supply of healthy labor force. 

3)On the job training: 

Many firms provide on the job training to their workers.It increases the skill and efficiency of the workers and leads to an increase in production by productivity. 

4) Expenditure on migration: - people migrate to one place to another that gives them better job opportunities and higher salaries. 

5). Expenditure on Information:- 

Expenditure is incurred to acquire information relating to labour market ,educational institutions.This information is necessary to make decisions regarding investment in 

human capital as well as for efficient utilization of the acquired human capital stock.

Importance of Human capital formation

Human Capital formation is very important for the growth of an economy. 

1.Effective use of physical capital: Its growth and productivity depends on human capital formation.

 2.Human capital formation raises the productivity and production as skilled worker makes the better use of the resources. 

3. Inventions, innovations and technological improvement are all due to the extra knowledge acquired during education .The knowledgeable, skilled and physically fit people help in the human capital formation.

4. Increases life expectancy:

 Health facilities and availability of nutritive food enable people to live a healthy and long life. This in turn, adds to the quality of life.

5. Improves Quality of life: 

 Human capital formation not only makes people productive and creative but also transforms the lives of the people.