Human capital

Human capital is a way of defining and categorizing peoples' skills and abilities as used in employment and otherwise contribute to the economy.

Some economic system theories refer to it simply as labour, one of three factors of production, and considered it to be a commodity - easily interchangeable. Other analysis, for instance in human development theory, differentiate social trust (social capital), sharable knowledge (instructional capital), and the individual leadership and creativity (individual capital) as three distinct capacities of a human applying him or her self in economic activity.

The term human capital in human development theory, thus refers to ambiguous combinations of these. Interactions with the welfare, education and health care systems can be modelled even past retirement (whereas, according to classical and neoclassical analysis, human capital would be zero, as no "labour", "employment" or "goods" are now involved).

Mobility between nations

There is a global debate regarding the fair distribution of human capital. This is most pointed with respect to educated individuals, who typically migrate from poorer places to richer places seeking opportunity, making 'the rich richer and the poor poorer'. When workers migrate, generally, their early care and education now benefit the country where they move to work. And, when they have health problems or retire, their care and retirement pension will typically be paid in the new country.

African nations have invoked this argument with respect to slavery, other colonized peoples have invoked it with respect to the 'brain drain' or 'human capital flight' which occurs when the most talented individuals (those with the most individual capital) depart for education or opportunity to the colonizing country (historically, Britain and France and the U.S.A). Even in Canada and other developed nations, the loss of human capital is considered a problem that can only be offset by further draws on the human capital of poorer nations via immigration.

The rights of individuals to travel and opportunity, despite some historical exceptions such as the Soviet bloc and it's "Iron Curtain", seem to consistently outweigh the rights of nation-states that nurture and educate them. Thus, the problem continues, and developed nations deny reparations are appropriate, necessary, or effective, as developing nations lose their talent.

This debate resembles, in form, that regarding natural capital.

See also social capital, instructional capital, individual capital, natural capital, capital (economics)