Human capital: basics

In short: Human capital refers to the totality of knowledge, skills, and health that make people productive and economically valuable. Investments in education and health are seen as central drivers of economic growth.

In more detail: Unlike physical capital such as machinery, human capital is inseparably tied to the individual person.

In detail

• Education as investment: School and vocational training increase a person’s productivity and income over the long term.
• Health as a factor: Healthy workers are more productive and are absent due to illness less often.
• Work experience: On-the-job training and practical experience expand human capital even after formal education ends.
• Returns to education: Economists measure how much additional years of education raise individual income over the long run.
• Country differences: Differences in education levels explain a significant part of economic differences between countries.
• Brain drain: The emigration of well-educated people can cause significant economic damage to countries of origin.
• Automation debate: The importance of certain skills shifts due to technology, making lifelong learning increasingly important (bruttoinlandsprodukt-bip, wirtschaftswachstum-grundlagen).