Human Capital

Definition

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Human capital is "the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being."   The definition recognizes both natural qualities (age, gender, and health) and learned abilities (education and training) that can be translated into wellbeing.

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Context

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In the context of strategic socio-economic policy planning, human capital relates to the following issues:

• Growth – Developed economies without natural resource wealth base their continued growth on the quality and improvement of their human capital.

• National Competitiveness – Productivity growth, the basis of national competitiveness, depends on the quality and relevancy of a country's human capital in the global marketplace.

• Quality of Life – An individual's quality of life is influenced by material wellbeing and employment security.  An individual's ability to guarantee wellbeing hinges on the demand for his ability and skills in the labor market.

• Poverty – A clear correlation between poverty and lack of education has been found in Israel and the world.  Those with education manage to improve their situation in tandem with economic growth, while those without education experience relative decline.

• Economic Fortitude – Human capital, realized in the labor market, contributes to an individual's ability to live in comfort, to improve wellbeing, and to cope with unexpected changes in personal, family, or employment situations.