Definition and Importance of Human Capital
Human capital refers to the fact that people in organizations and businesses are a very important and vital asset contributing to the development and growth in a similar capacity as the physical assets.
Currently, corporations are recognizing the economic importance of investing in their employees because the ability to stay on top of the economy lies in the efforts of developing and retaining their people in the organization. As such, the organizations that responsibly respond to the financial impact of their employee often refer to them as human capital consequently; the people’s skills, abilities, and attitudes collectively contribute to organizational performance and productivity (Weiss, 133).
In a similar way to other physical and monetary assets, organizational performance and efficiency is dependant on the skills, collective attitudes and capability of its employees (Temple, 57) in his study indicates that even in the presence of more advanced technology, competitive cannot be maintained since technology can be adopted unlike having a skilled workforce. Therefore, the organizations should not consider the amount used to improve their human capital as an expense.
Companies should enforce changes and plans to improve their people’s skills and abilities (Weiss, 154). Human capital has been seen important by many economists in explaining the income differences.
These human capitals are defined as important assets just like money and other physical assets in the growth and development of an organization to maintain a competitive edge. They are also seen as cost-effective while at the same time giving high performance unlike the use of more advanced technologies. Human capitals also can be used as indicators to show companies performance and development (Temple, 61)
Management occupations
Management Occupations – Financial Managers.
Business and Financial Operations Occupations.
In the Nonfarm business sector labor productivity, there was an annual increase of 9.5 percent during the third quarter of 2009, the U.S. Bureau of Labor Statistics reported. Unlike in the quarters before, the greatest gain was recorded in 2009 since 2003, which experienced an increase of 9.7 percent.
During the 3rd quarter of 2009, the productivity of the business sector increased by 9.8 % of which this was the marked rise as from the 1972 second quarter. Furthermore, there was a 5.1 % decrease in the costs of unit labor during the Third quarter of 2009 (Rudd, 110).
In the manufacturing sector, a 5.2 percent decrease in hours worked, despite a 7.7 percent increase in output, reflecting a 13.6 percent productivity growth. This also was a marked increase during the 1987 quarterly productivity series. Manufacturing productivity increased by 3.1 % while the output hours decreased by 10.8% and 13.5% respectively over the last four quarters. Manufacturing sector productivity increased 0.8 percent in 2008 and at an average annual rate of 4.0 percent from 2001 to 2007 (Sala-i-Martin, 75).
Importance of human capital to productivity
Human capital has been seen important by many economists in explaining the income differences. These human capitals are defined as important assets just like money and other physical assets in the growth and development of an organization to maintain a competitive edge. They are also seen as cost-effective while at the same time giving high performance unlike the use of more advanced technologies. Human capitals also can be used as indicators to show companies performance and development (Temple, 70)
Table 1: Labor Force Participation Rates, Part-Time Employment Status, and Hours of Work in the United States, by Gender (2005).
From the above table (Table 1), a comparison between the age-earnings profiles of men and women shows that women’s profiles tend to be less concave and to fun out as less as education rises. This thought is also connected to job training opportunities. This is due to the role women traditionally play in child-rearing and household production; historically it has been expected that way.
So in average women will tend to work fewer years for pay in comparison to men, and firms will have less incentive to offer them job training opportunities at the level received by men (Arditti, 28). Because of the shorter expected work life of women, the human capital investment model predicts that the benefits to the average women of investing in job training will be less.
However, nowadays the traditional lifestyle of women has changed, and their working lives are not much interrupted due to the child care programs introduced this has lent to the growth of GDP in the US economy.
Works cited
Arditti, Fred D., & Tysseland, Milford S. Three ways to present the marginal cost. Financial Management Association International, 1973. Web.
Rudd, Jeremy B. Empirical evidence on human capital spillovers: Board of Governors of the Federal Reserve System, Finance and Economics Discussion Paper no. 2000/46. 1 Web.
Sala-i-Martin, Xavier. 15 years of new growth economics: what have we learnt?, Columbia University Economics Department Discussion Paper no. 0102-47,2002. Web.
Temple, Jonathan. Growth effects of education and social capital in the OECD, in: OECD Economic Studies, no. 33 (2001/II), 2001, pp. 57-101. 1 Web.
Weiss, Andrew. Human capital vs. signaling explanations of wages. Journal of Economic Perspectives, Vol. 9, 4, 1995, pp. 133-154. Web.