How does expenditure on “On-the-Job-Training” and “Information” act as a source of human capital formation?

Question – How does expenditure on “On-the-Job-Training” and “Information” act as a source of human capital formation?

Answer –

Expenditure on On- the- job training

1. Enable workers to absorb new technology and ideas.
2. Help workers to enhance their specialised skills.
3. Help workers to acquire new technological skills.
4. It increases the skills and efficiency of the workers and further lead to an increase in production and productivity.
5. The return of expenditure on such training in the form of enhanced labour productivity is more than the cost of it.

Expenditure on Information

People spend to acquire information regarding to the labour market and educational institutions. For example, level of Salary associated with various types of jobs so that they can choose the right job Or, educational institutions which are providing right type of educational skill, their standard and cost etc.

This kind of information is necessary to make decisions regarding investment in educational as well as for efficient utilisation of the acquired skills and enable people to actualise their productive potential.

Thus, expenditure on acquiring all sorts of information regarding labour markets and other markets like education and health is also a source of human capital formation.

Related Questions-

• Distinguish between physical capital and human capital
• How does the following act as a source of human capital formation: (i) Expenditure on Health (ii) Expenditure on Education
• Discuss the educational achievements in India.
• Briefly discuss the various problems of human capital formation
• How does expenditure on “On-the-Job-Training” and “Information” act as a source of human capital formation?
• Why it is difficult to prove cause and effect relation between human capital and economic growth
• Distinguish between human capital and human development