Human Capital I_6

Human Capital I_6 - Human Capital A worker's human capital...

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1 Intro to Human Capital Ch 9 pp. 275-287 Human Capital A worker’s human capital is the stock of knowledge, skills and abilities possessed by the worker. Individuals can increase their human capital through education, training and experience. Examples: – A law student can increase her human capital through education by learning about previous court cases and by practicing in mock trials. – A new secretary can increase her human capital by getting training in the computer systems used by her company. – An experienced farmer has added to her human capital over the years by trying different methods and timing for growing crops. Human Capital Investment Investment in human capital takes place in three stages. 1) Early Childhood Investment decisions are made by others. Human capital Investments are very general. Basic language skills, basic math skills, attitudes towards learning, general health and life expectancy. 2) Teenagers and Young Adults Investments are made primarily through formal education (high school, college and/or vocational schools), though investments are also made through the training and experience provided by internships. Human Capital Investment Three stages of human capital investment. 3) Full-time workers On-the-job training, night school, short training programs, experience The first stage of human capital investment is arguably the most important of the three. Additionally, there is much economic research into the effects of early human capital investment on later economic outcomes. For example, how does a mother’s pre-natal drug use affect later earnings of the child? However, our discussion will focus on stages 2 and 3. The Benefit of Human Capital Three benefits of investment in human capital. 1. The increased earning of the worker in the labor market. Think of a worker “renting out” her human capital to an employer. 2. Increased productivity in household tasks. 3. Psychic benefits Benefits that occur because human capital accumulation (learning) is found to be pleasant or enjoyable. The Cost of Human Capital There are three general categories of costs of investment in human capital.
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This note was uploaded on 04/18/2008 for the course ECON 470 taught by Professor Yeonsookim during the Spring '08 term at Maryland.

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Human Capital I_6 - Human Capital A worker's human capital...

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