Sources of Human Capital Formation

The following factors contribute to human capital formation:

1. Expenditure on education

Education elevates social status. It also enables an individual to gain the ability to learn new technologies and enhance productivity. An educated population helps raise the economy of a nation to good heights.

2. Expenditure on health

Expenditure on health increases productivity, efficiency, and efficacy in the population. A healthy person is considered an asset for the nation as he can work more productively and give more effort to his work.

3. On-the-job training

Productivity can be enhanced by providing appropriate training, as it is one of the most effective ways to acquire a skill. Training sets the groundwork for further learning and helps one become skilled.

4. Migration

Migration refers to the mass movement of people from underdeveloped or developing nations to countries that are developed. It helps to utilize the skills of the individual and helps in perfecting them. These skills can be transferred to an underdeveloped country, which will help in the growth of a nation.

5. Information

Information related to the extent of the availability of admissions, jobs, and salaries plays a vital role in determining human capital. Proper information helps attract the best students as per their field of interest; in the same way, the availability of medical information helps keep one safe. Therefore, spreading information is critical for the effectiveness of human capital.

Excellent health can lead to outstanding performance, so it’s crucial for human capital growth. A healthy individual is likely to realize their full capabilities and make a financial contribution to society. An unhealthy individual cannot reach his full potential; therefore, he may become a liability for an organization and the economy. “Health is wealth,” as the proverb goes, suggests that being healthy increases one’s vitality, productivity, and income.

First, it is important to define human capital production so that we can better comprehend the role that health plays in it. In this article you will find What is the role of health in human capital formation?