Sources of Human Capital

There are 2 major sources of human capital in a country:

1. Investment in Education

People spend money on Education of Children

This is to increase their skills so that they can earn good income in future in jobs or business

Investment in Education includes money spent on school, college fees, training various skill development courses etc

2. Investment in Health

A healthy person can of course work better than a sick person

Hence, it is necessary to provide sick person with proper medical facilties, so that there is no loss of productivity

Expenditure on health includes following

Preventive Medicine (Providing Vaccines to people)

Curative Medicine (Curing Diseases through Medical Procedure)

Social Medicine (Supply of Health/Literacy)

Providing Clean Drinking Water

All these increase supply of healthy workforce

The following factors contribute to human capital formation:

1. Expenditure in Education

People spend money on Education of Children

This is to increase their skills so that they can earn good income in future in jobs or business

Investment in Education includes money spent on school, college fees, training various skill development courses etc

2. Expenditure on Health

A healthy person can of course work better than a sick person

Hence, it is necessary to provide sick person with proper medical facilties, so that there is no loss of productivity

3. Expenditure on Migration

People migrate from Rural areas to Urban areas because of higher employment opportunities in urban areas

However, there is cost of migration also in form of cost of transport, higher cost of living, psychological cost of living away from home

Since benefits of higher earning due to migration is more than cost of migration, it is also a source of capital formation

4. Information

People spend to obtain information about different labour market, job opportunities etc

This is obtained through internet, magazines, journals etc

Expenditure on aquiring these information is also a source of capital formation

5. On the Job Training

When a new employee is hired, he is first trained

They can be trained under supervision of skilled worker or they may be sent for off campus training

It is a source of human capital as leads to increase in skills of employee and increases their productivity

Health Infrastructure

A healthy person can of course work better than a sick person

Hence, it is necessary to provide sick person with proper medical facilties, so that there is no loss of productivity

Expenditure on health includes following

Preventive Medicine (Providing Vaccines to people)

Curative Medicine (Curing Diseases through Medical Procedure)

Social Medicine (Supply of Health/Literacy)

Providing Clean Drinking Water

All these increase supply of healthy workforce

Expenditure on Migration

People migrate from Rural areas to Urban areas because of higher employment opportunities in urban areas

However, there is cost of migration also in form of cost of transport, higher cost of living, psychological cost of living away from home

Since benefits of higher earning due to migration is more than cost of migration, it is also a source of capital formation

The information related to education and health expenditure is critical in estimating the resource requirements of these areas.

Ex - If children are admitted into schools and hospitals and required services are not present there.

This situation will lead to substantial amount of damage for the children

Therefore, acquiring information relating to health and education expenditure is necessary.

The given statement is correct

An educated person contributes more Economic Growth as compared to illiterate person

Education provides knowledge to understand changes in societies.

It also leads to new inventions and innovations which causes Economic Growth

As a result, inequality decreases

On the Job Training

When a new employee is hired, he is first trained

They can be trained under supervision of skilled worker or they may be sent for off campus training

It is a source of human capital as leads to increase in skills of employee and increases their productivity

1. Insufficient resources

The resources allocated for development of human capital are much less than required

2. Serious Inefficiencies

Society's resources are wasted massively as human capital are either not utlised or underutilised

3. Brain Drain

People of the country shift to other countires in search of better opportunities and handsome salaries

This leads to loss of high quality human capital for the country

4. High growth of population

Population of the country has been increasing, which reduces per capita availability of resources

5. Several Imbalances

Major resources available for education are spent in tertiary education, which creates imbalance in primary and

secondary education.

6. Lack of proper manpower planning

There is imbalance between demand and supply of human capital, especially for high skilled personnel

This imbalance leads to a lot of wastage

7. Weak science and technology

The technological development and the performance in the field of science have not been satisfactory.

A. Brain Drain

C. Insufficient resources

Explanation

1. Insufficient resources

The resources allocated for development of human capital are much less than required

2. Brain Drain

People of the country shift to other countries in search of better opportunities and handsome salaries

This leads to loss of high quality human capital for the country

Low growth of population is an incorrect point

Rather, it is a high growth of population

Population of the country has been increasing, which reduces per capita availability of resources

B. Expenditure on education

C. Expenditure on on-the-job training

Explanation

Investment in Education

People spend money on Education of Children

This is to increase their skills so that they can earn good income in future in jobs or business

Investment in Education includes money spent on school, college fees, training various skill development courses etc

People spend to obtain information about different labour market, job opportunities etc

This is obtained through internet, magazines, journals etc

Expenditure on aquiring these information is also a source of capital formation

On the Job Training

When a new employee is hired,he is first trained

They can be trained under supervision of skilled worker or they may be sent for off campus training

It is a source of human capital as leads to increase in skills of employee and increases their productivity

D. All of the above

Explanation

A healthy person can of course work better than a sick person

Hence, it is necessary to provide sick person with proper medical facilties, otherwise there will be a loss of salary, productivity, and safety

A.  An essential element of human resource development.