Expenditure on education is the most effective way of enhancing and enlarging a productive workforce in the country. It is therefore a very important determination of human formation. People do cost and benefit analysis of their expenditure on education. Most families decide to incur huge expenditure on education, even when they have to raise loans. Education enables and individual to make a good living throughout his life. His total earning during his life span would far exceed his initial expenditure on education. The different between benefit and cost of education measures the market value of human capital formation achieved through expenditure on education.
Other than formal education at the primary, secondary and university levels, the Government and NGOs organize study programmes for adults with a view to making them proficient in their work areas. This enhances their productivity, serving as a source of human capital formation.
Migration Migration contributes to human formation as it facilitates utilization of otherwise inactive skills. Migration involves cost of transportation from one place to the other and cost of living in different social environment. Yet people migration in search of better job opportunities. In India, people often migration from rural to urban areas. Why do they do it? Because, gains of migration in terms of higher salaries are greater than the cost of migration. Implying that migration leads to human capital formation, through fuller/better utilization skills.
Human capital formation generates a change in emotional and material environment of growth. Emotional environment become conducive to growth as people tend to acquire growth oriented attitude and aspirations. Material environment become helpful to growth as the society now possesses higher number of skilled and trained workers to implement the plans and programmes of economic growth.
Human capital increases productivity of physical capital referring to output per unit of capital. Specialized engineers and skilled workers can certainly handle machines better than the others. It enhances productivity and accelerates the pace of growth.
In our enthusiasm to spread higher education, we have been opening many universities, unmindful of their academic standards. Consequently, we have a large army of half baked graduates and post graduates whose deficient skills only cause deficiency in the levels of efficiency and productivity. This also lowers our competitiveness in the international market of human capital.
