Human Capital

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What is 'Human Capital'

Human capital is a measure of the economic value of an employee's skill set. This measure builds on the basic production input of labor measure where all labor is thought to be equal. The concept of human capital recognizes that not all labor is equal and that the quality of employees can be improved by investing in them. The education, experience and abilities of an employee have an economic value for employers and for the economy as a whole.

BREAKING DOWN 'Human Capital'

Economist Theodore Schultz invented the term in the 1960s to reflect the value of our human capacities. He believed human capital was like any other type of capital; it could be invested in through education, training and enhanced benefits that will lead to an improvement in the quality and level of production.

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RELATED FAQS
  1. What is human capital and how is it used?

    Learn about the concept of human capital, how it is developed and why it is important for businesses to protect their human ... Read Answer >>
  2. How do firms improve their employees' human capital?

    Learn what human capital is, how a firm can benefit from improving human capital and some ways a firm can improve its employees' ... Read Answer >>
  3. How do managers measure human capital?

    Learn what human capital is, how managers measure it and how managers measure human capital's return on investment to gauge ... Read Answer >>
  4. What is the relationship between human capital and economic growth?

    Learn what human capital and economic growth are and how human capital is related to economic growth, and see examples of ... Read Answer >>
  5. What causes human capital to depreciate?

    Read about what life events may cause a worker's human capital to depreciate, both in absolute terms and relative value compared ... Read Answer >>
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    Find out how and why a company's human resources department would measure labor supply, and what policies would address a ... Read Answer >>
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