According to human capital theory, the main benefit of investing in education is:

(A) Higher wages

(B) Individual Growth

(C) World Ranking of Country

(D) Empowerment of People

(E) Productivity

Choose the correct answer from the options given below:

The correct answer is - Higher wages and Productivity

Key Points

• Higher wages
  • According to the human capital theory, investing in education enhances an individual's skills and knowledge.
  • This increased skillset makes individuals more valuable to employers, leading to higher wages.
• Productivity
  • Education and training improve an individual's ability to perform tasks more efficiently and effectively.
  • Higher levels of education are associated with increased productivity in the workplace.

Additional Information

• Human Capital Theory
  • Developed by economists like Gary Becker, the theory posits that investments in education and training are similar to investments in physical capital.
  • These investments enhance an individual's economic productivity and potential earnings.
• Benefits of Education
  • Besides higher wages and productivity, education contributes to personal development and empowerment.
  • However, the primary economic rationale for education investment, according to human capital theory, remains the enhancement of wages and productivity.