Human Capital Accumulation w = a + β1s + β2t + Error

“In order for the economy to develop, we where:

need skills. The people need to be β1 - represents the return to each
equipped.” additional year of schooling
β2 - represents the return to work
experience
Human Capital Accumulation
- investment in human capital and its ● through education and experience,
effect on: wages increases
a. individual productivity (should ● values added: graduate studies and
be higher) internships, organization experience,
b. wages (then this also extracurricular activities
increases)
c. economic growth (then this 2. Solow Model
improves) Y = A*F (K, L)
- the firms/institutions investing in
human capital where:
Y = output
A = technology
K = capital
L = labor

Solow Model with Human capital

Y = A*F (K, H, L)

● human capital includes

a. education
b. skills
c. health

Another Interpretation:
● the population must not exceed the Y = A * K^α * H^β * L ^ 1-α-β
resources that it produces
where:
α and β = output elasticities of
Human Capital Accumulation Models
physical and human capital
1. Mincerian Approach
h = human capital
● allows sustained growth at higher
w = wages levels of income
t = work experience ● allows expansion of physical (labor)
β1β2 = coefficients representing return and capital
to education and experience
s = years of schooling
Real World Application: Model of Human Capital and Health
● to study economic growth patterns - economic growth and health has a
● SK, Japan, and Singapore invested in directly proportional relationship
education to increase their human
capital, which in the end led to Human Flourishing
economic growth - 5 aspects of well being
a. happiness and satisfaction
Schooling and Labor Market Consequences of b. physical and mental health
School Construction in Indonesia: Evidence c. purpose and meaning
from an Unusual Policy Experiment by Esther d. character and virtue
Duflo e. close relationships
- ethics of Aristotle: a person is not
● impact on educational attainment contented by happiness but through
results to increase in wages well being which is by eudaimonia
● deducted this from a cost-benefit - eudaimonia → well-being → live well
analysis life → living the virtues

Female Leadership Raises Aspirations and 5 Aspects of Flourishing

Educational Attainment for Girls: A Policy - was tested in a workplace to see how
Experiment in India it affects productivity and relationship
● role model effect on human capital among the management
accumulation
Flourishing Index
- used 5,000 employees
Date: October 18, 2024 Secure Flourish Index

Impacts on Education and Health in the

Presence of Treatment Externalities Date: October 22, 2024
- from Kenya
- deworming (intestinal worms) Expanding Capabilities: Access to Credit
- no adequate supply of water Market (Amartya Sen)
- they conducted their deworming using
random testing Credit Market
- the deworming program decreased - loans
the absences in school by 25% - bonds
- increased school attendance and - products of banks
participation - an exclusive group, to those who have
- no evidence for increased test scores the capacity to present themselves to
the bank as credible
Health and Educational Outcomes: Why?
- public health issues in school age - for capital that finances operations for
children businesses
- a person must be an agent of his/her
own health Business
- the state has the reason and right to - expansion to earn more profit → living
protect the citizens better (development)
Amartya Sen - idea of security because the
- indian scholar government is able to protect
- redefined development, focusing on the people
expanding choices and opportunities, - business of insurance
not just income because it gives safety nets
- we call this welfare economics: when
we talk about development, choices, 2 Contrasting Ideas by Amartya Sen
and opportunities, we talk about the
Kerela Kolkata
well-being of each person
- we are focusing on the well-being of - low income - high income
people before GDP (bc it will state state
eventually follow) - high literacy - lower health
and health outcomes
outcomes
Five Types of Freedom
- focuses on
1. Political Freedom social
- hone the institutions opportunities
- democratic rights - development
- freedom of speech is more than
- participation in political economic
process (voting) growth
2. Economic Freedom
- opportunities to participate in Paper: disruptive innovations (2012 onwards)
economic activities (trade, buy - idea of e-wallets
things/consume) - digital banking (expand
- example: In India, with the banking to those in the “perip
existence of the caste system, - look for others
the people do not have so - check: human development
much freedom when it comes index 2009-2012, 2013
to choosing what they want to onwards) and relate to the
do topic
3. Social Freedom
- access to education, Date: October 29, 2024
healthcare which are crucial
for enhancing capabilities Political Freedom (common good) → Civic
4. Transparency Guarantees education - to empower everyone to be critical
- trust, transparency, and thinkers
freedom from corruption in
government and business Capability Approach - Functioning vs.
- guarantees that institutions are Capabilities
working well ● Functioning
- corruption increases GDP - working/operating
5. Protective Security - outcomes/ achievements that
- Social safety net insurance, directly contribute to a
rule of law person’s well being
- well-being is also being
well-nourished
 - example: Japanese schools,
the government invest so Takeaways:
much a. universal human rights
● Capabilities - common to everyone across
- freedom/opportunities that the planet
people have to achieve their b. capabilities help expand and develop
functionings universal human rights which then
- “A man’s search for meaning” - leads to flourishing
increasing the capacity of the c. human flourishing
mind
- there’s always a potential for Self-determination Theory (Ryan Deci,
people to stretch in order for 1990s)
capabilities to increase - a concept that encompasses universal
- achieving different functionings human rights, capabilities and human
- allows individuals to pursue flourishing
well-being Needs that are crucial for motivation and
satisfaction
Freedom - autonomy: in control of one’s
- umbrellas capabilities and functionings behaviors
- allows choices to exist for persons - competence: being able to do
- enhances well-being by allowing a something
person to have choices that are - relatedness: connecting with others
meaningful to them
*these needs flourish universal human rights
Credit as economic freedom
- if without access to credit market Human Development Index
people are unable to increase assets, - developed by UNDP
no opportunity for housing, no - dimensions: life expectancy (health),
opportunity to expand business years of schooling (education), and
GNP per capita (standards of living)
- offers comprehensive use of human
Date: November 5, 2024 being

Martha Nussbam’s Ten Central

Capabilities:
1. Life: right to live a normal length of life
2. Bodily Health
3. Bodily Integrity
4. Senses, Imagination, and Thought
5. Emotions
6. Practical Reason
7. Affiliation
8. Other Species
9. Play
10. Control over One’s Environment