Theodore Schultz (1961) argues that there is plausible cause to believe that human capital is responsible for the economic growth from 1900 to 1956 and even today, although economists and society grapple with the thought of investing in human beings as “capital goods.” Not only does it go against the grain of our moral values to refer to human as “capital goods” but that it is intolerable and it degrades people. This paper identifies with and examines the concept of human capital theory from Schultz’s point of view, the returns to education, and lifetime earnings.
Human Capital Theory
The theoretical framework of human capital theory (HCT) hinges on the concept that education and training acquired through tertiary education, that is, investment …show more content…
They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets (para. 2).
In fact, HCT suggests that there is a direct correlation between the additional years of higher education or lack thereof, training, and a person’s lifetime income. Human capital theory evaluates the significance of the returns to education and training, the time foregone from earnings and the cost associated with tertiary education, mainly since people are responsible for the cost of their own education (Becker, as cited in Seong-O, & Patterson, 2014) or employers for on-the-job-training which benefit both to the individual, the employer, and society at …show more content…
The same is true for those who reject the idea and argue that education is not the only factor that affect production and economic growth. Certainly one can argue for wither side of the debate. However, Schultz’s argument is supported by empirical studies that show there is a direct correlation between education, wages, and the quality of input and output in production, thus economic growth. For this reason, individual who choose not to invest in higher education or lack formal training are at a disadvantage both economically and to an extent,
Human Capital Theory
The theoretical framework of human capital theory (HCT) hinges on the concept that education and training acquired through tertiary education, that is, investment …show more content…
They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets (para. 2).
In fact, HCT suggests that there is a direct correlation between the additional years of higher education or lack thereof, training, and a person’s lifetime income. Human capital theory evaluates the significance of the returns to education and training, the time foregone from earnings and the cost associated with tertiary education, mainly since people are responsible for the cost of their own education (Becker, as cited in Seong-O, & Patterson, 2014) or employers for on-the-job-training which benefit both to the individual, the employer, and society at …show more content…
The same is true for those who reject the idea and argue that education is not the only factor that affect production and economic growth. Certainly one can argue for wither side of the debate. However, Schultz’s argument is supported by empirical studies that show there is a direct correlation between education, wages, and the quality of input and output in production, thus economic growth. For this reason, individual who choose not to invest in higher education or lack formal training are at a disadvantage both economically and to an extent,