Explain the following as a source of human capital formation

  • investment in training
  • investment in acquring information

The role of Investment in training and in acquiring information is discussed below:


Investment in Training: Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. It is the most effective kind of method for imparting him/her the technical skills and know-how at the actual work site. Under this, a trainee is assisted (or hands on) and trained by a trainer (usually by an experienced employee) when the trainee is actually doing the job. This helps the trainee not only to acquire the theoretical and practical skills simultaneously but also enables him to learn from the experiences of his/her trainer and, thereby, can increase his/her efficiency and productivity. This is the most common type of training programme because the returns in terms of increased productivity far exceeds the cost of the training. Thus, the expenditures on such training improves the quality of human capital by enhancing its productivity, efficiency and income earning capacity.


Investment in Acquiring Information: The degree of availability of jobs, salaries and admissions related information also play an important role in the determination of human capital. The availability of jobs and admissions related information not only helps the students to opt for the best choice according to their interest areas but also lead to the effective utilisation of human skills and knowledge. Similarly, the availability of medical information and health awareness determine the health of the people. Thus, the investment on the spread of information (of education and health) determines the effectiveness and efficacy of human capital.

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