Explain four sources of human capital formation. OR Explain the main sources of human capital formation.

Question

Accepted Answer

The main sources of human capital are:
- **Investment in education:** Generates technical skills and creates manpower for improving labour productivity. Education brings down birth rate and results in social benefits.
- **Investment in health:** Health is a human capital asset. Earnings potential is directly influenced by growth in human well-being.
- **On-the-job-training:** Enhances labour productivity by developing abilities and skills.
- **Migration:** Source of human capital formation leading to higher returns. People migrate in search of better employment opportunities and higher earnings.
- **Information:** Expenditure on information regarding labour market, education, health, etc., helps in making proper investment decisions.