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write the sources of human capital and explain them?

 i. Education

Education not only raises the standard and quality of living but also encourages modern attitudes of people. Moreover, education increases the productive capacity and productivity of a nation’s workforce by honing their skills. Further, education increases the acceptability of the modern techniques and also facilitates a primitive economy to break the shackles of tradition and backwardness. An investment in educational sector has two fold benefits. It not only increases the income earning capacity but also reduces the skewed distribution of income, thereby, forming an egalitarian society. The investment in educational sector has long lasting returns. It not only enhances the present economic condition but also improves the future prospects of a country. The importance of education is not only limited to making people educated but also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like, poverty, income inequality, population, investments, under utilisation of resources. Therefore, investment in education must be accorded high priority in a country. 

ii. Health

There is a saying “The greatest wealth is health”. The wealth of a country can be increased with the efforts of healthy workforce. Investment in health sector increases efficiency, efficacy and productivity of a nation’s workforce. In contrast to an unhealthy person, a healthy person can work better with more efficiency and, consequently, can contribute relatively more to the GDP of a country. Good health and medical facilities not only increase the life expectancy but also improve quality and standard of living. Investing in health sector ensures the perennial supply of healthy workforce. Some of the common expenditures incurred in the health sector are on providing better medical facilities, easy availability of life savings drugs, common vaccination, spread of medical knowledge, provision of proper sanitation and clean drinking water, etc. Thus, the expenditure incurred on health is important in the building and maintaining a productive work force.

Investment in Training: Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. It is the most effective kind of method for imparting him/her the technical skills and know-how at the actual work site. Under this, a trainee is assisted (or hands on) and trained by a trainer (usually by an experienced employee) when the trainee is actually doing the job. This helps the trainee not only to acquire the theoretical and practical skills simultaneously but also enables him to learn from the experiences of his/her trainer and, thereby, can increase his/her efficiency and productivity. This is the most common type of training programme because the returns in terms of increased productivity far exceeds the cost of the training. Thus, the expenditures on such training improves the quality of human capital by enhancing its productivity, efficiency and income earning capacity.

 

Investment in Acquiring Information: The degree of availability of jobs, salaries and admissions related information also play an important role in the determination of human capital. The availability of jobs and admissions related information not only helps the students to opt for the best choice according to their interest areas but also lead to the effective utilisation of human skills and knowledge. Similarly, the availability of medical information and health awareness determine the health of the people. Thus, the investment on the spread of information (of education and health) determines the effectiveness and efficacy of human capital.Investment in Training: Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. It is the most effective kind of method for imparting him/her the technical skills and know-how at the actual work site. Under this, a trainee is assisted (or hands on) and trained by a trainer (usually by an experienced employee) when the trainee is actually doing the job. This helps the trainee not only to acquire the theoretical and practical skills simultaneously but also enables him to learn from the experiences of his/her trainer and, thereby, can increase his/her efficiency and productivity. This is the most common type of training programme because the returns in terms of increased productivity far exceeds the cost of the training. Thus, the expenditures on such training improves the quality of human capital by enhancing its productivity, efficiency and income earning capacity.

 

Migration

Migration refers to the movement of people from underdeveloped or developing countries to developed countries in search of better avenues. Migrations contribute to human capital formation as it facilitates the utilisation of inactive or underdeveloped skills of an individual. The cost of migration involves cost of transportation and cost of living at the migrated places. Usually, the cost of migration is very high due to the high cost of transportation and high cost of livelihood in the developed countries. But still, people migrate in search of better job opportunities and handsome salaries. Migration of human capital helps the underdeveloped countries to acquire technical skills, efforts reducing methods and efficient way of performing tasks. These skills and know-how are transmitted by the migrated people to their home country that not only add to the economic growth and development but also enhance the human capital of the home country.

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Education investment is recognised as one of the main sources of human capital along with other sources like health, migration, on-job training, and information.
Investment in Education
The most powerful way to improve and expand the fruitful workforce in the state is by nourishing and building up the education system. It is acknowledged as the root of human capital formation, that is the reason why the parents and also the government spend more on education. Few objectives why individual and state investment is more in education are:
  • To develop their future income
  • To build manpower and enhance their technical skills, to improve workers productivity, hence resulting in economic growth
  • To control the population growth rate by reducing the birth rate and making maximum resources available per person.
  • Knowledge and education can be transferred to others, resulting in social advantages
Investment in Health
The second major source of human capital formation is the health sector. An unwell person will influence productivity. Few health-related investments are: providing clean and safe drinking water, therapeutic medicines, etc.

Migration
An individual, to get higher salaries, good jobs, migrate from their native place to another place. In India, unemployment is the reason for rural-urban migration. Other skilled and qualified individuals like doctors, engineers, etc., migrate from one country to another in search of better opportunities. In both situations, migration involves transportation costs, cost of living in the migrated place, etc. The increased incomes in the new place exceed the values of migration. Therefore, investment in migration is another source of human capital formation.

On-the-job Training
To increase labour productivity, many companies provide on-job training. This source of income is expensive, and companies bear huge expenses for providing on-job training. Examples: in-house training, training under a skilled supervisor, and off-campus training.

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