Final answer:
Human capital is the accumulation of workers' skills and education, which translates into workforce productivity and company performance. Investments in human capital, such as education and apprenticeships, enhance a worker's productivity and earning potential, thus benefiting the economy and the company's success.
Step-by-step explanation:
What is Human Capital?
Human capital refers to the accumulated skills and education of workers. This includes the information, skills, knowledge, education, and health of the workforce, representing their ability to convert their time into productive work. An investment in human capital, similar to the historical Industrial Revolution, leads to an expansion of abilities and a more effective use of human resources, ultimately contributing to the performance of a company.
For instance, education upgrades such as college attendance are considered investments in human capital because they aim to increase the future productivity of students and thus enhance their earning potential. Similarly, apprenticeships that provide job-relevant skills also contribute to human capital. Effective human resources practices that focus on improving the health, skills, or knowledge of workers are critical to boosting company performance.
Moreover, a workforce with quality human capital through improved education, skills, and motivation is more productive, has a higher earning potential, and is better equipped to contribute to the economy's circular flow of activity. This is especially true in competitive and dynamic markets, where companies and bureaucracies must continually invest in developing their human capital to ensure sustained growth and competitiveness.