What does "human capital" refer to in economics?

Human capital in economics refers to the economic value of a worker's experience and skills. This concept emphasizes the importance of the capacities, knowledge, and abilities that individuals acquire through education, training, and experience, which contribute to their productivity and efficiency in the workforce.

Investing in human capital is seen as a critical factor for enhancing individual earnings and overall economic growth. When individuals gain skills and knowledge, they become more valuable to employers and can often command higher wages, thereby improving their standard of living and contributing to broader economic prosperity.

Understanding human capital is essential in the context of labor markets and economic policies, as it highlights the role of education and professional development in shaping a workforce that is agile, skilled, and able to respond to the demands of various industries.