human capital

Examples of human capital in the following topics:

• Changing Worker Productivity

  • In economics and long-run growth, worker productivity is influenced directly by fixed capital, human capital, physical capital, and technology.
  • A human resource is transformed into human capital with the effective inputs of education, health, and moral values.
  • Human capital and increased worker productivity are critical because they are different from the tangible monetary capital or revenue.
  • Human capital grows cumulatively over a long period of time.
  • Examine the role of human capital in production and economic growth

• Improving Education and Health Outcomes

  • A country can impact its long-term growth by affecting human capital through education and healthcare investments.
  • Human capital requires investment, but also provides economic returns.
  • As education increases human capital increases, countries will also expect to see higher productivity, wages, and the GDP .
  • Although health is not directly related to human capital, it is obvious that without health and life human capital will be impacted negatively.
  • Health policies can have positive long-run effects on not only human capital, but also economic growth as a whole.

• Aggregate Production

  • The aggregate production function examines how the productivity depends on the quantities of physical capital per worker and human capital per worker.
  • The aggregate production function examines how productivity, or real GDP per worker, depends on the quantities of physical capital per worker and human capital per worker.
  • Aggregate production functions create an estimated framework to determine how much of an economy's growth is related to changes in capital or changes in technology.

• Defining Capital

  • Physical Capital: capital that must be produced by human labor before it can become a factor of production (also referred to as manufactured capital).
  • Natural Capital is capital that occurs naturally in the environment and is protected because it supports human life.
  • It is the general concept of inter-relationships between humans have money-like value that motivates actions.
  • Human Capital is capital that includes social, instructional, and individual human talent combined together.
  • As a term, it is used to define balanced growth where the goal is to improve human capital and economic capital equally.

• Determinants of investment

  • Firms can buy non-residential capital (buildings, equipment, etc. ) while individual consumers can buy residential capital (houses).
  • Economic investment, also referred to as capital investment, is different from and should not be confused with financial investment.
  • Non-residential fixed investment: The amount purchased per unit time of goods which are not consumed, but are used for future production (capital).
  • An example of non-residential fixed investment is investment in human capital, which includes additional schooling or training.

• Total Factor Productivity

  • Total factor productivity measures the residual growth in total output of a firm, industry, or national economy that cannot be explained by the accumulation of traditional inputs such as labor and capital .
  • In the equation above, Y represents total output, K represents capital input, L represents labor input, and alpha and beta are the two inputs' respective shares of output.
  • Total factor productivity is less tangible than capital and labor inputs, and it can account for a range of factors, from technology, to human capital, to organizational innovation.
  • Total output is not only a function of labor and capital, but also of total factor productivity, a measure of efficiency.

• Other Factors of Production

  • There are three factors of production that are required to produce economic output: land, labor, and capital.
  • Labor:which includes all human effort used in production as well as the necessary technical and marketing expertise; and
  • Capital: which are the human-made goods used in the production of other goods, such as machinery and buildings .
  • In accounting and other disciplines, the phrase "capital" can also refer to cash that have been invested in a business.
  • The classical economists also employed the word "capital" in reference to money.

• Inputs and Outputs of the Function

  • Capital refers to the material objects necessary for production.
  • Machinery, factory space, and tools are all types of capital.
  • Although in reality a firm may own the capital that it uses, economists typically refer to the ongoing cost of employing capital as the rental rate because the opportunity cost of employing capital is the income that a firm could receive by renting it out.
  • Thus, the price of capital is the rental rate.
  • Labor refers to the human work that goes into production.

• Conditions of Equilibrium

  • It's possible that an automobile company could manufacture 1,000 cars using only expensive, technologically advanced robots and machinery (capital) that do not require any human participation.
  • If capital and labor are the only factors of production, then spending an additional $1 on labor while holding the total cost constant means taking $1 out of capital.
  • The cost of that action will be the output lost from cutting back on capital, which is the ratio of the marginal product of capital (MPK) to the price of capital (the rental rate, PK).
  • Thus, the cost of cutting back on capital is MPK/PK.
  • Most firms need a combination of both labor and capital in order to produce their product.

• Production Inputs and Process

  • Labor, capital, and land are the three necessary inputs for any production process.
  • Production processes require three inputs: land, capital and labor.
  • Capital, otherwise known as capital assets, are manufactured goods that are used in production of goods or services.
  • For a caveman, a stick or a stone would have been considered capital.
  • Labor is a measure of the work done by human beings to create a manufactured output.