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NE #6 - invested today in human capital is very likely to...

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Yi Ting Chen Economics 110 May 26, 2011 Naked Economics Write-Up Chapter 6 I carefully read N.E. Chapter 6. To generate profits, companies need some input to produce whatever kinds of goods or services which are desirable for consumers. Capital is one of the most important inputs for producers to operate their companies. The book discusses about a different type of capital: human capital. Human capital is intangible, yet a very important concept in economics. People often wonder why certain person can earn so much while others are only able to gain little income. According to the book, human capital is the sum total of skills embodied within a person. For example, education, experience, intelligence, creativity or even the ability to play really well in certain sports are all example of human capital. Why firm are willing to pay more for those who have better human capitals? Because, the money the firms
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Unformatted text preview: invested today in human capital is very likely to yield a greater return in the future. The author describes human capital as a “economic passport” which allow those who have higher skills or abilities to get a job, earn more money, and have a better life quality. With this in mind, we now can better understand that the massive unemployment might just be a symptom of poor people lacking of human capital, not an economic illness. People often have the fallacy to think that the amount of job offers is fixed. Some believe that if one needs to find a job, he has to wait till other person losses his job. Nevertheless, the fact if jobs are created anytime when individual provides new goods or service. It does not really matter if others loss their jobs or not. One of the remedy of unemployment can be subsidizing education to make sure more people are gaining needed human capital....
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