Answer :
Human Capital Theory links worker productivity to their skills and knowledge, which can be increased through investments like education. These increases in 'human capital' are similar to increases in physical capital, as both types increase output. Governments and society at large also invest in human capital for economic growth.
Human Capital Theory identifies the links between workers' skills, knowledge, and their productivity. It posits that, like physical capital, such as infrastructure or equipment, human capital can be invested in, and this investment can yield greater productivity. The investment can be through avenues such as education and training. This is akin to increasing the quantity of physical capital or improving its quality.
In essence, a worker accumulates human capital when they increase their skills or knowledge. This accumulation is akin to a company accumulating physical capital, such as equipment. In both cases, the immediate investment allows for higher output in the future.
Additionally, society and governments also heavily invest in human capital, primarily through the education system to foster a highly educated and skilled workforce, thereby spurring economic growth. Nevertheless, questions persist about the correlation between public spending on education and improvements in the actual level of education.
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