Human capital

Human capital means the value of people’s skills, knowledge, training, health, and experience that helps them do work more effectively and productively.

• It is called “capital” because, like machines or tools, it is something that can increase production and quality—but it is stored in people, not in objects.
• Education and training build human capital: learning to read well, solve problems, use technology, or master a trade (like plumbing, nursing, coding, or cooking) makes a worker more capable.
• Health and nutrition are also part of human capital: a healthy person can work with more energy, focus, and fewer sick days, which improves performance.
• Human capital helps explain why two people doing the “same job” may produce different results—because their practice, expertise, and decision-making can differ.
• A concrete example: when a government or family invests in schools, skill courses, vaccination, and hospitals, it is investing in human capital, which can raise incomes and improve the country’s overall development.

Thinking of people as human capital highlights that improving lives through education and health also strengthens the economy and society.