Human Capital Theory Essay

Human Capital

It has been well established that economic success is often related to the skills, knowledge, and abilities that individuals possess. (Keeley, 2007, p.3) The greater the ability and education a person has, the more success they can expect in their professional careers. This knowledge, training, and ability is referred to as "Human Capital" because a person's abilities often translate into economic success in the workplace. However, the concept of Human Capital is not only dependent upon a person's individual skills, but also access to training and education opportunities. Because these opportunities are often linked to a person's inherent economic and social standing, Human Capital resources are not always accessible to the people with the greatest skills. Therefore, those who do have access to Human Capital resources are not always the most skilled people, but the people with the best personal resources. In this way, the theory of Human Capital contains a fundamental flaw which often creates a gap between skills and economy.

Capital is a term that is associated with economics and is often equated with money, or something that has a similar value. But as researchers discovered that the greater the skills and education a person possesses, the greater the economic success they enjoyed, scientists began to view skills and education as a form of economic capital.This would include such things as schooling, additional periodic training courses, and even medical care. But because "you cannot separate a person from his or her knowledge, skills, health, or values," these things produce what is called "Human Capital." (Becker, 1993, p.16) In the modern world, Human Capital is considered to be an "intangible asset," meaning it is not a physical asset like oil, minerals, or forests; but is defined as the abilities and knowledge which can influence new products, research and development, networking, and other factors that can impact the economic success of a company. While physical capital still matters, intangible forms of capital "matter just as much and probably more." (Betcherman, 1998, p.2) Human Capital is important because it has been linked to the concept of "quality of work," which has been defined as one of the "key ingredients for economic prosperity." (Lowe, 2001) In other words, Human Capital: educations, skills, etc., are the types of intangible assets that are important for economic success.

Human Capital may be an important aspect of economic success, both for the company and the individual, but this type of capital is a mix between personal attributes, such as skills and talents, and education and training. This….....