NORTHERN CHRISTIAN COLLEGE The Institution for Better Life Laoag City Course Code Course Description Professor Reporter Semester Topics I. : : : : : : GRADUATE SCHOOL EDUC 335 EDUCATION AND NATIONAL DEVELOPMENT ANABELLE C. FELIPE, PhD GERLIE ANN C. PITPIT SUMMER, SY 2021-2022 HUMAN CAPITAL THEORY Education and Economic 1.1 Definition Human Capital theory originates from Adam Smith in 1776, with his book ‘The Wealth of Nations’. Gary Becker later went on to build upon Smith’s original theory who went on to coin the term ‘Human Capital’ in his 1964 book. Becker highlighted a key similarity between what we normally consider as capital and ‘human capital’. He highlighted that traditional ‘capital’ such as stocks, steel plants, or assembly lines produce a yield – they are an investment that produces further income. Becker went on to state that this could also be applied to ‘human capital’ such as schooling or on-the-job training. Both increase the economic output of the individual, so act in a similar way as a new steel plant. So the more education an individual has, the more they are capable of producing an earning, thereby increasing their worth to the firm. (https://boycewire.com/human-capital-definition/) Human Capital - 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. (https://article1000.com/human-capital-theory/) 1.2 Types Knowledge capital - The value of a company or organization's employee knowledge, business training and any proprietary information that may provide the company with a competitive advantage. Social capital - Social capital relates to the relationships between individuals, that is, to the social links and norms of mutuality and trust between members, as they develop in social networks. Emotional capital - refers to self-confidence based on the self-esteem, courage and resilience that individuals need in order to convert their knowledge and relationships into effective actions. 1.3 Elements Skills, Qualifications, and Education The productivity of workers is closely tied to their skills, education, and qualifications. This is especially the case in businesses that specialize in services, technology, or intangible products where value is created by innovation and creativity rather than working with physical materials Work Experience The more experienced employees are, the more they create value. According to the Harvard Business Review, it may take employees anywhere from three months to a year to become productive. Social and Communication Skills No matter how much employees know or how much they have developed expertise in a corporate culture and practices, that knowledge is of little use if they cannot communicate effectively or work well with other employees. Habits and Personality Traits For individual employees, habits and personality traits can be a source of value. Individual Fame and Brand Image / Judgement Brand image is what makes a business immediately recognizable to potential customers. 1.4 Minus Factors . • The relationship between education and increase in income is difficult to measure. This is because the increase in personal income is influenced by many factors other than education. Therefore, it is very difficult to measure marginal productivity, especially of human capital. • It is difficult to measure cost and benefit analysis of human capital. Though the direct cost of education is easier to calculate, the opportunity cost and the estimation of income forgone are difficult to measure. • The demand for education does not only depend on costs and benefits, but on the ability to pay for education.
