Human capital refers to the skills and knowledge that people acquire through investment in education, health, job training, migration, and information. Some key sources of human capital formation include spending on education, which enhances the productive workforce; spending on health through preventative medicine, curative treatment, and health literacy; on-the-job training through internal and external programs; migration to seek better jobs and living conditions; and acquiring information about labor markets and education/health markets.

1. HUMAN CAPITAL
FORMATION

2. HUMAN CAPITAL
FORMATION

3. HUMAN CAPITAL
FORMATION
What is Human Capital?
Just as a country can turn physical resources
like land into physical capital like factories,
similarly, it can also turn human resources
like students into human capital like
engineers and doctors.

4. HUMAN CAPITAL
FORMATION
Sources of Human Capital?
Investment in education is considered as one
of the main sources of human capital. There
are several other sources as well.
Investments in health, on-the-job training,
migration and information are the other
sources of human capital formation

5. HUMAN CAPITAL
FORMATION
Expenditure on
Education
Main source of Human Capital
Enhance productive workforce of the
country
Spending on education by individuals is
similar to spending on capital goods by
companies – increase profit

6. HUMAN CAPITAL
FORMATION
Expenditure on
Health
 Preventive Medicine – Vaccination
Curative Medicine – Medical intervention
during illness
Social Medicine – Spread of health literacy

7. HUMAN CAPITAL
FORMATION
On – the – job
Training
 Internal Training – Workers trained in the
firm itself under the supervision of skilled
workers
External Training – Workers may be sent
for off-campus training, ie, outside training

8. HUMAN CAPITAL
FORMATION
Migratio
n
People migrate in search of better jobs –
high salary and living conditions
Unemployment is the reason for the rural –
urban migration in India
Expenditure on migration is also a source
of human capital formation

9. HUMAN CAPITAL
FORMATION
Informatio
n
People spend to acquire information
relating to the labour market and other
markets like education and health