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.