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date: 17 September 2021

Abstract and Keywords

This article opens by identifying two principal reasons for looking into the definition of human capital (HC). Defining HC broadly as the ‘skills, knowledge, and capabilities of the workforce’, it argues: first, that these are critical inputs to production; and second, that resources expended on increasing them are investments like more conventional investments in resources, facilities, and equipment. While a person's possessing ‘skills and knowledge’ is an old idea, the article argues that the recent history of HC is its rehabilitation as an additional variable to help explain economic growth not otherwise accounted for by conventional macroeconomic analysis. It reports that despite forty years of objections, HC has become central to macroeconomics, labour economics, growth theory, trade theory, development economics, the economics of education, the theory of the firm, human-resource management, and strategy theory – a very significant impact.

Keywords: human capital, skills, knowledge, resources, facilities, equipment

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