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ECO 204 Week 4 Assignment Human Capital


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Human Capital 1
JANUARY 10, 2010

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Human Capital 2
Would you consider education consider an investment in human capital? “Capital is
considering goods produced by the economic systems that are used as inputs to produce other
goods and services in the future” (Case, Fair & Oster, pg. 221). When most people hear the
words capital the first thing that normally comes to mind is making a profit through a business
after expenses. There are many forms of capital which many economists feel as if education is an
investment in human capital.
I would agree that education is an investment in human capital because when a person
decided to increase their education level they are also increasing their skills which in the long run
with help a business in more ways than one. Many companies have a great understanding of this
and that is why so many will pay extra for a person with a degree or even send their employees
to school. This is an investment which is helping a company to pursue the goals of the company
which can also lead to the success of the company. The return for someone with a college
education is much higher than someone without.
Companies tend to hire someone with a degree which they pursued on their own because
this will require less time, training and funding when it comes to getting a person operating to
company’s expectations. Someone with a College degree that has never worked in their area of
expertise will be able to pick up certain acronyms, codes or wordings that are used during their
orientation or training. This will speed up the training process and have the individual set to work
in the area which they were hired for with little to no supervision which will also allow for more

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Human Capital 3
manpower being used throughout the company. When doing the measurements to see where a
college graduate will be placed on the pay scale or supervisor level the company could measure
this in many ways one depending on the level of degree; this will show how the person feels
about this particular field because many times if someone start in one field then change to
another they are showing that they are not really into the field. The individual transcripts could
be requested as part of the application process which would also show just how knowledgeable
an individual is in that area which could also show just how much training will be required.
As a business owner when looking at education being human capital and an investment to
my company I will be able to determine if it’s worth the investment by placing the individual on
a 6 month trial period with a chance for a raise after the evaluation period depending on the
quality of work. Overall I feel as if economists are correct saying that education is an investment
in human capital.

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