Editing Human capital (section)

==Criticism==
Some [[labor economics|labor economists]] have criticized the Chicago-school theory, claiming that it tries to explain all differences in wages and salaries in terms of human capital.  One of the leading alternatives, advanced by [[Michael Spence]] and [[Joseph Stiglitz]], is "signaling theory".  According to signaling theory, education does not lead to increased human capital, but rather acts as a mechanism by which workers with superior innate abilities can signal those abilities to prospective employers and so gain above average wages.

The concept of human capital can be infinitely elastic, including unmeasurable variables such as personal character or connections with insiders (via family or fraternity). This theory has had a significant share of study in the field proving that wages can be higher for employees on aspects other than human capital. Some variables that have been identified in the literature of the past few decades include, gender and nativity wage differentials, discrimination in the work place, and socioeconomic status.

The prestige of a [[credentialism|credential]] may be as important as the knowledge gained in determining the value of an education. This points to the existence of [[market failure|market imperfections]] such as non-competing groups and [[labor-market segmentation]]. In segmented labor markets, the "return on human capital" differs between comparably skilled labor-market groups or segments.

Following Becker, the human capital literature often distinguishes between "specific" and "general" human capital. Specific human capital refers to skills or knowledge that is useful only to a single employer or industry, whereas general human capital (such as literacy) is useful to all employers. Economists view firm-specific human capital as risky, since firm closure or industry decline leads to skills that cannot be transferred (the evidence on the quantitative importance of firm specific capital is unresolved).

Human capital is central to debates about [[Welfare spending|welfare]], [[education]], [[health care]], and [[retirement]].

In 2004, "human capital" ({{langx|de|Humankapital}}) was named the [[Un-word of the year|German Un-Word of the Year]] by a jury of linguistic scholars, who considered the term inappropriate and [[inhumane]], as individuals would be degraded and their abilities classified according to economically relevant quantities.<ref>[http://einestages.spiegel.de/external/ShowTopicAlbumBackground/a23795/l42/l0/F.html#featuredEntry Spiegel Online: ''Ein Jahr, ein (Un-)Wort!''] (in German).</ref>

"Human capital" is often confused with human development. The UN suggests "Human development denotes both the process of widening people's choices and improving their well-being".<ref name="hdr.undp.org">Composite indices — HDI and beyond, http://hdr.undp.org/en/statistics/indices/ {{Webarchive|url=https://web.archive.org/web/20131114183701/http://hdr.undp.org/en/statistics/indices/|date=2013-11-14}}, retrieved July 27, 2013</ref> The UN Human Development indices suggest that human capital is merely a means to the end of human development: "Theories of human capital formation and human resource development view human beings as means to increased income and wealth rather than as ends. These theories are concerned with human beings as inputs to increasing production".<ref name="hdr.undp.org" />