An overview of Human Capital Index

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AN OVERVIEW OF HUMAN CAPITAL INDEX

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• INTRODUCTION

• ECONOMIC PERSPECTIVE OF HUMAN CAPITAL

• ROLE OF HUMAN CAPITAL FORMATION

• SOURCES OF HUMAN CAPITAL

• FOUR PILLARS OF HUMAN CAPITAL

• HUMAN CAPITAL INDEX FOR TOP TEN COUNTRIES

• STATUS OF HUMAN CAPITAL IN INDIA

• PROBLEMS OF HUMAN CAPITAL IN INDIA

• CONCLUSION

• REFERENCE3

Introduction

• Human capital collectively represent the wealth of an individual or

business.

• Human capital is the stock of knowledge, habits, social and

personality attributes, embodied in the ability to perform labour so

to produce economic value.

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Economic Perspective of Human Capital

• Economic perspective of Human Capital Refers to factors of

production used to create goods or services.

• Thus, human capital is one of production elements which

generate added-values.

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Human capital as knowledge and skills obtained by people as capital

in the process of vocational and technical education.

Such a capital is a product of well considered investments and it

generates income.

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Increases production - Knowledgeable , skilled , qualified persons

can contribute their maximum to the economy. They can increase

production through optimum utilization of resources .

Increases productivity – It promotes innovations , creativity and new

technology so that maximum possible time and cost.

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Improve quality of life: Human capital formation focuses on

quality of population , better the quality of population more will

be the economic growth and development .

Creates positive attributes – People with positive attributes are

more open to creativity and innovations and are rational in their

decision making .

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• Education

• Health

• On-the-Job-Training

• Migration

• Information

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Spending on education by individuals is similar to

spending on capital goods by companies with the

objective of increasing future income over a period

of time.

Likewise, individuals invest in education with the

objective of increasing their future income.10

Health is important for the development of an individual.

Medicines, provision for clean drinking water and good

sanitation are various forms of health expenditures.

Health expenditure directly increases the supply of healthy

labor force a source of human capital formation.

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Firms spend on on-the job-training to their workers, this may

take different forms.

The workers may be trained in the firm itself under the supervision of

a skilled worker.

The workers may be sent for off-campus training.

Expenditure regarding on-the-job training is a source of human

capital formation as the return of such expenditure in the form of

enhanced labor productivity is more than the cost of it.

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People migrate in search of jobs that fetch them higher

income than what they may get in their villages.

Engineers and doctors, migrate to other countries because of

higher salaries.

The enhanced earnings in the new place outweigh the costs of

migration; hence, expenditure on migration is also a source of

human capital formation.

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People spend money to acquire information relating to the

labour market including education and health.

This is necessary to make decisions regarding investments in human

capital as well as for efficient utilization of the acquired human

capital stock.

Expenditure incurred for acquiring information relating to the

labour market and other markets is also a source of human capital

formation.

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The Education pillar contains indicators relating to

quantitative and qualitative aspects of education across primary,

secondary and tertiary levels and contains information on both

the present workforce as well as the future workforce.

The Health and Wellness pillar contains indicators relating to

a population’s physical and mental well– being, from childhood

to adulthood.

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The Workforce and Employment pillar is designed to quantify

the experience, talent, knowledge and training in a country’s

working–age population.

The Enabling Environment pillar captures the legal framework,

infrastructure and other factors that enable returns on human capital.

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Sub-Pillar Indicator Weight

1. Access Primary enrolment rate (%) 2.08

Secondary enrolment rate (%) 2.08

Tertiary enrolment rate (%) 2.08

Education gender gap 2.08

2. Quality Internet access in schools 2.08

Quality of education system 2.08

Quality of primary schools 2.08

Quality of math and science education 2.08

Quality of management schools 2.08

3. Attainment Primary education attainment (% population age 25+) 2.08

Secondary education attainment (% population age 25+) 2.08

Tertiary education attainment (% population age 25+) 2.08

Total Pillar

Weight

25.00

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Source: Human Capital Index 2013.


1. Survival

Infant mortality (per 1.000 live births) 1.79

Life expectancy 1.79

Survival gender gap 1.79

2. Health

Stunting and wasting (% in children under 5) 1.79

Unhealthy life year (% of life expectancy) 1.79

Deaths under 60 from non-communicable diseases 1.79

Obesity (% of adults with BMI ≥30) 1.79

Business impact of non-communicable diseases 1.79

Business impact of communicable diseases 1.79

3. Well-being

Stress (% of respondents) 1.79

Depression (% of respondents) 1.79

4. Services

Water sanitation and hygiene 1.79

Healthcare quality 1.79

Healthcare accessibility 1.79

Total Pillar Weight 25.00

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1. Participation

Labour force participation rate, age 15-64 (%) 1.56

Labour force participation rate, age 64+ (%) 1.56

Economic participation gender gap 1.56

Unemployment rate 1.56

Youth unemployment rate 1.56

2. Talent

Country capacity to attract talent 1.56

Country capacity to retain talent 1.56

Ease of finding skilled employees 1.56

Pay related to productivity 1.56

Capacity for innovation 1.56

Index of economic complexity 1.56

Firm level technology absorption 1.56

Scientific and technical journal articles 1.56

Median age of the working population 1.56

3. Training Staff training 1.56

Training Services 1.56


Source: Human Capital Index 2013. .


1. Infrastructure Mobile users 2.78

Internet users 2.78

Quality of domestic transport 2.78

2. Collaboration State of cluster development 2.78

Business and university R&D collaboration 2.78

3. Legal framework Ease of doing business 2.78

Social safety net protection 2.78

Intellectual property protection and property rights 2.78

4. Social mobility Social mobility 2.78



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Rank Score Rank Score Rank Score Rank Score Rank Score

1 1.455 4 1.313 1 0.977 1 1.736 2 1.793

2 1.406 1 1.601 9 0.844 3 1.250 1 1.926

3 1.232 3 1.348 13 0.762 2 1.345 5 1.471

4 1.161 7 1.106 4 0.901 8 1.150 4 1.484

5 1.111 14 0.977 2 0.960 6 1.154 10 1.351

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Overall index Education Health and

wellness

Workforce and

employment

Enabling

environment

6 1.109 19 0.888 8 0.877 9 1.149 3 1.522

7 1.104 15 0.970 6 0.890 5 1.182 8 1.373

8 1.042 10 1.031 17 0.682 10 1.072 7 1.384

9 1.024 18 0.891 3 0.943 12 0.932 11 1.330

10 0.987 2 1.355 20 0.548 15 0.875 17 1.168

Source: Human Capital Index 2013. 22


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25


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Source: Human Capital Index 2013

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Low income Lower-middle

income

Upper-middle

income

High income

Rank country score Rank country score Rank country score Rank country Score

81 kenya -0.306 50 Sri Lanka 0.020 22 Malaysia 0.644 1 Switzerla

nd

1.455

92 Kyrgyz

Republic

-0.440 53 Indonesia 0.001 35 Costa

Rica

0.320 2 Finland 1.406

96 cambodia -0.505 63 Ukraine -0.124 42 Panama 0.207 3 Singapore 1.232

103 Malawi -0.629 66 Philippine

s

-0.161 43 China 0.186 4 Netherlan

ds

1.161

104 Tanzania -0.680 70 Vietnam -0.202 44 Thailand 0.158 5 Sweden 1.111

105 Madagasc

ar

-0.725 73 Armenia -0.218 45 Kazakhsta

n

0.124 6 Germany 1.109

106 Uganda -0.727 77 Georgia -0.258 47 Mauritius 0.099 7 Norway 1.104

110 Banglade

sh

-0.782 78 India -0.270 52 Jordan 0.005 8 United

Kingdom

1.042


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Human Capital Index 2013 Rank/122 score

Overall Ranking 78 -0.270

Education 63 0.020

Health and wellness 112 -0.868

Workforce and employment 49 0.005

Enabling environment 67 -0.239


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Fig. 7 :


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Source: Human Capital Index 2013

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Figure 9: Relationship between Global Competitiveness Index and Human Capital Index In the World


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1

3

2

4

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Source: Karnataka Human Development Report 2005

The Human Development Index for top five districts of Karnataka (2001)

District

Indicator

HDIHealth Education Income

Index Rank Index Rank Index Rank Value Rank

Bangalore Urban 0.705 5 0.887 1 0.666 1 0.753 1

Dakshina Kannada 0.707 3 0.823 4 0.636 2 0.722 2

Udupi 0.713 1 0.842 2 0.588 5 0.714 3

Kodagu 0.638 18 0.833 3 0.621 3 0.697 4

Shimoga 0.707 4 0.766 6 0.547 10 0.673 5

Source: Karnataka Human Development Report 2005

Table 8 : The Human Development Index for top five districts of Karnataka (2001)

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Table 9 : Five top and bottom ranking districts in HDI: 2001 and 1991

Source: Karnataka Human Development Report 2005 38

• Increase in population

• Flawed investment in education

• Lack of health facilities

• Lack of on the job training

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The Human Capital Index seeks to create greater awareness among

a global audience of human capital as a fundamental pillar of the

growth, stability and competitiveness of nations.

Human Capital is the backbone of Human Development and

economic development in every nation.

Human Capital need motivation to raise their value and

performance.

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• http://en.wikipedia.org/wiki/Human capital

• http://www3.weforum.org.

• frcatel.fri.uniza.sk/hrme/files.

• Karnataka Human Development Report 2005

• http://reports.weforum.org/human-capital-index-2013.

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An overview of Human Capital Index

Education

schultz human capital

indiaproblems of human

human capitalis

capital goods

introductionhuman capital

economic growth

economic value

migration people