Economics of Human Capital - Essay Example

he justification for this argument was that essentially the amount of available land for production was believed to be limited due to the fact that land cannot grow at the same pace as capital and labor, consequently, land becomes insufficient, and capital and labor in the end become saturated and less efficient and less profitable (Mauro & Fernandez 68). This essay discusses the role of human capital in economic growth. Nevertheless, these early growth framework took in a fourth variable—knowledge, or technological development, that allowed available capital and labor to generate greater yields on specific amounts of land.

The rate and extent of transformation of this fourth variable was viewed as exogenous to the framework—knowledge only grew constantly by itself and not as an outcome of investments or capital constituted within the framework. However, examinations of the potential sources of increases in national productivity over time revealed consistently that this inadequately known and non-quantifiable variable-- technological development-- comprised a substantial portion of overall economic development all over the 20th century (Qadri & Waheed 93).

Obviously, economists did not accept the assumption that knowledge expanded without help, and hence several adjustments on this framework enable ‘labor’ input to expand not just by increasing work hours and people, but also by hypothesizing that the labor force’s human capital could, successfully, expand by means of training and education. This model is quite subjective, and, according to numerous economists, scarcely better than merely considering technological development as a residual variable that provides explanation of the portion of economic progress that cannot be clarified by expansion in physical or human capital (Becker(b) 57).

During the 1980s, economists became fascinated with a modeling framework referred to as ‘New Growth Theory’, which viewed the role of growth in technological and