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Question

Explain how health and expenditure on information are a source of human capital formation.

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Solution

Health as a Source of Human Capital Formation: Health is an important source of human capital formation because only a healthy worker can contribute towards increasing the capital stock of the country. A sick worker, without access to medical facilities, is compelled to abstain from work, and there is a loss of productivity.

Expenditure on Information as a Source of Human Capital Formation: People spend to acquire information relating to the labour market, education and health institutions, etc. Information relating to job opportunities and educational institutes enables people to increase their earning potential. Therefore, it is also a determinant of human capital formation.


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