Editing Human capital (section)

==History==
[[File:Human capital.png|thumb|Human capital infographic]]
[[Adam Smith]] included in his definition of [[Capital (economics)|capital]] "the acquired and useful abilities of all the inhabitants or members of the society". The first use of the
term "human capital" may be by [[Irving Fisher]].<ref>{{Cite web|url=http://scholar.harvard.edu/files/goldin/files/human_capital_handbook_of_cliometrics_0.pdf|title=Human Capital|last=Claudia Goldin|first=Department of Economics Harvard University and National Bureau of Economic Research}}</ref> An early discussion with the phrase "human capital" was from [[Arthur Cecil Pigou]]:

{{blockquote|There is such a thing as investment in human capital as well as investment in material capital. So soon as this is recognised, the distinction between economy in consumption and economy in investment becomes blurred. For, up to a point, consumption is investment in personal productive capacity. This is especially important in connection with children: reducing unduly expenditure on their consumption may greatly lower their efficiency in after-life. Even for adults, after we have descended a certain distance along the scale of wealth, so that we are beyond the region of luxuries and "unnecessary" comforts, a check to personal consumption is also a check to investment.<ref>{{cite book |author-link=Arthur Cecil Pigou |last=Pigou |first=Arthur Cecil |title=A Study in Public Finance |year=1928 |publisher=Macmillan |location=London |page=29 }}</ref>}}

But the term only found widespread use in economics after its popularization by economists of the [[Chicago School of economics|Chicago School]], in particular [[Gary Becker]], [[Jacob Mincer]], and [[Theodore Schultz]].

The early 20th century Austrian sociologist [[Rudolf Goldscheid]]'s theory of organic capital and the human economy also served as a precedent for later concepts of human capital.<ref>{{cite book|last=Lemke|first=Thomas|author-link=Thomas Lemke (sociologist)|year=2011|translator-last=Trump|translator-first=Eric Frederick|title=Biopolitics: An Advanced Introduction|place=New York and London|publisher=New York University Press|isbn=978-0814752418|url=https://books.google.com/books?id=cRVNFqFPGtoC&pg=PA108|pages=108–109}}</ref>

The use of the term in the modern [[Neoclassical economics|neoclassical]] [[economics|economic]] literature dates back to [[Jacob Mincer]]'s article "Investment in Human Capital and Personal Income Distribution" in the ''[[Journal of Political Economy]]'' in 1958.<ref>Mincer, Jacob   ''Studies in Human Capital''. [https://books.google.com/books?id=Exx8_r-RpQkC&dq=%22Investment+in+Human+Capital+and+Personal+Income+Distribution%22&pg=PA3 1.  "Investment in Human Capital and Personal Income Distribution"]. Edward Elgar Publishing, 1993.</ref> Then [[Theodore Schultz]] also contributed to the development of the subject matter. The best-known application of the idea of "human capital" in economics is that of Mincer and [[Gary Becker]]. Becker's book entitled ''Human Capital'', published in 1964, became a standard reference for many years. In this view, human capital is similar to "[[Capital (economics)|physical means of production]]", e.g., factories and machines: one can invest in human capital (via education, training, medical treatment) and one's outputs depend partly on the [[Rate of return on investment|rate of return]] on the human capital one owns. Thus, human capital is a [[means of production]], into which additional investment yields additional output. Human capital is substitutable, but not transferable like land, labor, or [[fixed capital]].

Some  contemporary [[Economic growth#Theories|growth theories]] see human capital as an important [[economic growth]] factor.<ref>{{cite journal |first1=Eric |last1=Hanushek |first2=Ludger |last2=Woessmann |title=The Role of Cognitive Skills in Economic Development |year=2008 |journal=[[Journal of Economic Literature]] |volume=46 |issue=3 |pages=607–668 |doi=10.1257/jel.46.3.607| url=http://hanushek.stanford.edu/sites/default/files/publications/Hanushek%2BWoessmann%202008%20JEL%2046%283%29.pdf|citeseerx=10.1.1.507.5325 }}</ref> Further research shows the relevance of education for the economic welfare of people.<ref>{{cite journal |last=Rindermann |first=Heiner |title=Relevance of education and intelligence at the national level for the economic welfare of people |date=March 2008 |journal=Intelligence |volume=36 |issue=2 |pages=127–142 |doi=10.1016/j.intell.2007.02.002 }}</ref>

[[Adam Smith]] defined four types of fixed capital (which is characterized as that which affords a revenue or profit without circulating or changing masters). The four types were:
# useful machines, instruments of the trade;
# buildings as the means of procuring revenue;
# [[land improvement|improvements of land]];
# the acquired and useful abilities of all the inhabitants or members of the society.
Smith defined human capital as follows:

<blockquote>Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society.  The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person.  Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs.  The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, and which, though it costs a certain expense, repays that expense with a profit.<ref>[http://www.adamsmith.org/smith/won-b2-c1.htm] {{Webarchive|url=https://web.archive.org/web/20100110212852/http://www.adamsmith.org/smith/won-b2-c1.htm|date=2010-01-10}} Smith, Adam: ''An Inquiry into the Nature And Causes of the Wealth of Nations Book 2 – Of the Nature, Accumulation, and Employment of Stock''; Published 1776.</ref>
</blockquote>

Therefore, Smith argued, the productive power of labor are both dependent on the division of labor:

<blockquote>The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgement with which it is anywhere directed, or applied, seem to have been the effects of the division of labor.</blockquote>

There is a complex relationship between the division of labor and human capital.

In the 1990s, the concept of human capital was extended to include natural abilities, physical fitness and healthiness, which are crucial for an individual's success in acquiring knowledge and skills.<ref>{{Cite book|title=Encyclopedia of the City|url=https://archive.org/details/encyclopediacity00cave|url-access=limited|last=Caves|first=R. W.|publisher=Routledge|year=2004|isbn=9780415252256|pages=[https://archive.org/details/encyclopediacity00cave/page/n402 362]}}</ref>

As a result of his conceptualization and modeling work using Human Capital as a key factor, the 2018 [[Nobel Prize for Economics]] was jointly awarded to [[Paul Romer]], who founded the modern innovation-driven approach to understanding economic growth.

In the recent literature, the new concept of '''task-specific human capital''' was coined in 2004 by [[Robert Gibbons (economist)|Robert Gibbons]], an economist at [[Massachusetts Institute of Technology|MIT]], and [[Michael Waldman (economist)|Michael Waldman]],<ref>Michael Waldman, Ph.D., Faculty Professor at the Samuel Curtis Johnson Graduate School of Management, Cornell University USA|https://economics.cornell.edu/michael-waldman</ref><ref>[https://www.johnson.cornell.edu/Faculty-And-Research/Profile?id=mw46 Michael Waldman]'s profile at the [[Johnson School of Management]]</ref> an economist at [[Cornell University]]. The concept emphasizes that in many cases, human capital is accumulated specific to the nature of the task (or, skills required for the task), and the human capital accumulated for the task are valuable to many firms requiring the transferable skills.<ref>{{Cite journal |last1=Gibbons |first1=Robert |last2=Waldman |first2=Michael |date=May 2004 |title=Task-Specific Human Capital |journal=American Economic Review |volume=94 |issue=2 |pages=203–207 |doi=10.1257/0002828041301579 |issn=0002-8282}}</ref> This concept can be applied to job-assignment, wage dynamics, tournament, promotion dynamics inside firms, etc.<ref>{{Cite journal |last1=Gibbons |first1=Robert |last2=Waldman |first2=Michael |date=2006-01-01 |title=Enriching a Theory of Wage and Promotion Dynamics inside Firms |url=http://dspace.mit.edu/bitstream/1721.1/3537/2/4324-03.pdf |journal=Journal of Labor Economics |volume=24 |issue=1 |pages=59–107 |doi=10.1086/497819 |issn=0734-306X |s2cid=222327628 |hdl-access=free |hdl=1721.1/3537}}</ref>