Course

Human Capital

Instructor: Alex Tabarrok, George Mason University

Human Capital : The knowledge, habits, and skills that make workers able to create economic value. This is from the video “ Human Capital and Signaling ” in the

Human Capital: The knowledge, habits, and skills that make workers able to create economic value. This is from the video “Human Capital and Signaling” in the Principles of Microeconomics course.

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Transcript

As we saw in the last video, people in the United States are very lucky to be able to work in a productive economy that raises their wages well above the world average, regardless of skill. Within the United States, however, or any country, some workers have relatively low wages and others much higher wages.


What accounts for these differences? Well, one reason is differences in human capital. Physical capital is things like tools and tractors and software, things that make people more productive. Human capital is tools of the mind. The stuff in people's head that makes them productive. And just as with physical capital, producing human capital requires investment, training, experience and especially, formal education.


Let's take a closer look at the effect of education on earnings.

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