What is the role of education in human capital formation?

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#1

What is the role of education in human capital formation?
OR
How does investment in human capital yield a return just like investment in physical capital?

Answer:
Education helps in the human capital formation in the following ways:

  • Investment in education of human resource results in the formation of human capital.
  • One can earn higher income because of higher productivity of the more educated or better trained persons, thus contributing towards human capital formation.
  • Investment in human resource via education and medical care can give higher rates of return in the future.