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Human Capital Education Analysis

Decent Essays

As stated by Riddell, human capital is often referred to as the skills, competencies, and knowledge that one possesses, including both cognitive skills and non-cognitive skills. Human capital can be largely determined or influenced by your environment and it is essential to individual and social well being. As a result, most people tend to place great consumption value on education based on the belief that acquiring an education can result in many private benefits such as higher earnings and better health. Human capital formation and education specifically, play an important role in the economy and society as a whole, as it largely affects the labour market. Education provides individuals with equal opportunity to better themselves and climb the social ladder, and often results in enhanced productivity and economic growth if used effectively. However, investment in education is risky as there is great uncertainty as to …show more content…

There are also credit market failures as a result of imperfect information provided to Canadians in regards to education, or the lack there of. Riddell suggested that the government could intervene and finance post-secondary education for those who come from a less fortunate background, and improve the quantity and quality of information available to individuals. This would enable them to make informed decisions about acquiring an education versus immediately starting work. Government standards for education can also be enforced to potentially narrow or close the gaps between skilled- and unskilled-workers in employment and their wages as the demand for highly skilled workers continues to grow due to technological change and other economical advances. Without government intervention, Riddell assumed that significant underinvestment would be likely to

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