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13.1: Human capital

  • Page ID
    108443
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    Human capital, HK, is the stock of knowledge and ability accumulated by a worker that determines future productivity and earnings. It depends on many different attributes – education, experience, intelligence, interpersonal skills etc. While human capital influences own earnings, it also impacts the productivity of the economy at large, and is therefore a vital force in determining long-run growth. Canada has been investing heavily in human capital in recent decades, and this suggests that future productivity and earnings will benefit accordingly.

    Human capital is the stock of knowledge and ability accumulated by a worker that determines future productivity and earning.

    Several features of Canada's recent human capital accumulation are noteworthy. First, Canada's enrollment rate in post-secondary education now exceeds the US rate, and that of virtually every economy in the world. Second is the fact that the number of women in third-level institutions exceeds the number of men. Almost 60% of university students are women. Third, international testing of high-school students sees Canadian students performing well, which indicates that the quality of the Canadian educational system appears to be high. These are positive aspects of a system that frequently comes under criticism. Nonetheless, the distribution of income that emerges from market forces in Canada has become more unequal.

    Let us now try to understand individuals' economic motivation for embarking on the accumulation of human capital, and in the process see why different groups earn different amounts. We start by analyzing the role of education and then turn to on-the-job training. At the outset, we recognize that many individuals acquire knowledge for its own sake or in order to improve the quality of their lives. Education can improve one's appreciation of art, literature and the sciences.


    This page titled 13.1: Human capital is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Douglas Curtis and Ian Irvine (Lyryx) via source content that was edited to the style and standards of the LibreTexts platform; a detailed edit history is available upon request.