Disadvantages Of Human Capital

The term, human capital, is mostly referred to be the crucial part of growth processes of businesses.
Oecd (2011) defined human capital as “ the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being.” Human capital investments always have been considered as the tools for fighting against long-term unemployment, low salary and poverty (Oecd, 1998).

Lifelong education requires investments for individual’s own capital. However, these investments should be well understood and well fitted to one’s own needs (Oecd, 1998). This theory now can be defined as a vital indicator in economic productivity, and can be identified regarding several types of human behaviors.

Acemoglu (2009) specifies human capital “ corresponds to any stock of knowledge or characteristics the worker has that contributes to his or her productivity”.

The advantage of the theory can be considered as ability to not only respect schooling, but also of a several other aspects as investments such as quality of education, training, attitudes towards work. However, this theory also has the big disadvantage which is only being focused on “skills” but not considering other dimensions such as years of schooling. (Acemoglu, 2009). Acemoglu (2009) also suggests to consider three types of exceptions for wage distributions as follows;
“(1) Compensating differentials: a worker may be paid less in money, because he is receiving