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Human Capital

In this article we will learn about Sources of Human Capital, Education, Health, On the job training, etc.

Human Capital

Natural resources, human resources, physical capital, technological development, and social and political factors all influence a country’s economic growth. This paper examines the role of human capital in India’s economic growth. This study is being done to look at the relationship between human capital and economic growth in India. Healthcare spending was used as a proxy variable for human capital. This study is found on multiple linear regression models and the neoclassical long run economy.

This study discovered a strong positive relationship between human capital and economic growth, which was the other variable used in the study. Gross capital formation and secondary school enrollment are also positively impacting India’s economic growth. According to this study, secondary school enrollment has the greatest impact on India’s GDP growth. This study concludes that in order to achieve long-term sustained economic growth, policymakers should consider allocating financial resources toward improving India’s human capital, which can be accomplished through increased health-care spending and increased educational funding. India’s population can be a source of economic growth rather than a hindrance.

You can convert any physical resources like land , property into physical capital like factories, and just like that, you can also convert your country’s human resources into human capital such as doctors and engineers. However, to produce more human capital, you need some human capital, such as professors and teachers. 

Sources of Human Capital

Human capital is sourced through investments in education, on-the-job training, migration, information, and health.


  • Enhanced employment and earnings by acquiring new skills and knowledge.


  • Expenditure on health is an essential source of human capital formation by enhancing an individual’s well-being and physical and mental capacity in a disease-free state of his body.  
  • The many forms of health expenditures include preventive medicine (vaccine), curative medicine, social medicine, and the provision of safe drinking water and sanitation.
  • Many firms expand on giving on-the-job tutoring to their employees.
  • This may either be under a skilled worker’s supervision or in off-campus special tutoring. 
  • Enhanced labor productivity justifies the cost incurred on on-the-job training. 


  • Migration is practiced in search of jobs that provide higher salaries than those at their native places.
  • Unemployment is one of the main reasons for rural-urban migration in India.
  • Better salaries for technically-qualified persons is the reason for migrating to countries. 
  • Enhanced earnings due to migration justify the migration costs like transport, cost of living, etc. 


  • People spend to obtain knowledge related to the labour market and other markets like health and education. For example, Knowing the level of salaries associated with various types of jobs.
  • Which educational institutions and at what expense supply the correct type of employable skills. 
  • These details and information are critical for making conclusions regarding investments in human capital as well as for coherent utilisation of the obtained human capital stock. 

Human Capital and Economic Growth

  • Economic growth can be defined as an increase in a country’s national income.
  • The contribution of healthy and educated individuals to economic growth is more than that of illiterate individuals.
  • Education and health and a variety of other factors such as on-job training, job market information, and migration increase an individual’s income-generating capacity.
  • This may be due to the measurement problem of human capital, as education or health measured in terms of years of schooling, life expectancy, etc., may not reflect the true status of people. 
  • Human capital growth in developing countries has been comparatively faster than the growth of per capita income. Also, this relation between both variables is bi-directional. That is higher-income causes the building of a high level of human capital and vice versa.

Government Initiatives

  • Ayushman Bharat Yojana aims to make interventions in primary, secondary, and tertiary care systems in order to address healthcare holistically.
  • Skills: The Skill India Mission was established to meet India’s growing demand for skilled labour across industries.
  • Education: The Samagra Siksha Abhiyan, which merged the three previous schemes of Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA), and Teacher Education (TE), aims to provide equal educational opportunities and equitable learning outcomes.
  • Wage increases under the MGNREGA rural employment scheme will boost rural domestic demand and improve livelihood opportunities for the poor.