Human Capital: State of the Field and Ways to Extend the Concept

The paper critically examines the human capital concept that was developed in the realm of labour economics and economic growth and development, and that recently became an important way of thinking in education policy. The definition and the historical origins of the concept are provided, and the specific issues pertaining to human capital are discussed – measurement of human capital, human capital externalities, macroeconomic effects of human capital, rates of returns to education, institutional prerequisites and enablers of human capital accumulation. The critical analysis of the concept’s shortcomings and possible extensions then follows. We consider alternative conceptualizations of the human capital that are present in economics and other social sciences noting that these alternative views may have different (and frequently opposing) implications for policy. We indicate multiple rationales and logics of education and human capital investment, uncertain outcomes of the accumulation process, multiple dimensions and components of the human capital, the importance of the broader socio-economic context that shapes education investment and policy and sets prerequisites for policy, the complexities of the human capital formation process at policy level (competing political interests, but also values, philosophies and interpretations of policy problems), as well as at individual level (objective constraints to learning, varying learning outcomes and paths of human capital formation). It is also stressed that analysis of human capital would necessarily consider the costs and negative effects of particular forms of human capital, as well as capital depreciation issues. The paper forms basis for the formulation of alternative frameworks of human capital accumulation and education policy.