Human Capital And Productivity

Economist Theodore Schultz invented the term human capital in the 1960s to reflect the value of our human capacities. He believed human capital was like any other type of capital; He believed that investing on human capital would lead us to a higher production, (Investopedia)

Investopedia defines human capital as a measure of the economic value of an employee's skill set. The concept of human capital recognizes that not all labor is equal and that the quality of employees can be improved by investing in them. The education, experience and abilities of an employee have an economic value for employers and for the economy as a whole. (Investopedia)

Investors Words defines Human Capital as "the set of skills which an employee acquires on the job, through training and experience, and which increase that employee's value in the marketplace." (Investors words) Human capital is a way of defining and categorizing peoples' skills and abilities as used in employment and otherwise contribute to the economy. (wikipedia)

These are definitions that the dictionary on line and investors' words on line give, but in this paper, I will explain human capital and productivity based on Wheelan's concepts, and other sources. I use real people's examples for a better understanding.

Human beings possess qualities, skills, and talents that make them different from other human beings. Skills are considered human capital because they make you unique; they differentiate you and make you better at something than anyone else. There are different types of skills. Some human beings possess scarce skills, or human capital, such as a great education and knowledge at computer programming such as Bill gates, or the ability to be the best at basketball or golf, like Michael Jordan or Tiger Woods.

These people have a huge human capital because they possess skills no one else has, and these scarce skills give them the opportunity and the advantage to become rich. They get paid a lot of money because no one else can do what they do at the high level they do. People invest on human capital, such as education and training, but some human capital is not for anyone to invest on. Some human capital is like a gift, like a talent, and cannot be bought or paid for. The gift that Michael Jordan was born with was the physical and mental skills to be the best basketball player, and he never invested on them, he just worked on them to become better.