Business Environment, 1st Edition by Pearson

Chapter 6: Human Resource Development | 67 |

HUMAN CAPITAL

Human capital is sometimes used as an alternative term for the

factor of production, labour.

6

Human capital refers to the skills,

capacities, abilities possessed by an individual which permit him to

earn income. We can thus regard income he derives from supplying

personal services (as opposed to lending money, letting property) as

the return on human capital he possesses. We can regard a period of

formal or informal training and acquisition of these skills as a pro-

cess of creating human capital, just as the construction of machin-

ery, buildings, and the like creates physical capital.

7

Autar S. Dhesi in his book, Human Capital Formation and

its Utilization, says “knowledge ...