Human Capital Theory

Human capital theory is important to scholars in sociology and economics of education. Human capital adherents argue for investment in people through education and health care, risking a short-term loss of resources for long-term gains. According to human capital theory, economic growth depends not only on the nation's physical capital (such as roads), but also on the education and health of the labor pool. Human capital theorists suggest that schooling promotes economic and social development because the benefits to the individual spill over to help society. Theodore W. Schultz introduced his theory of human capital in the early 1960s. He asserted that the transition from traditional to modern society requires investment in people. This investment in people through education and health care creates human capital. ...