Question

How does spending on health contribute to the formation of human capital?

Options

• By accelerating the depreciation of human capital with ageing

• By raising the supply of healthy labour

• By making human capital tradable in the market

• By making human capital separable from its owner

Answer 1

Health expenditure—on preventive, curative, and social medicine, and sanitation—forms human capital because a healthier population means a larger supply of healthy labour. Healthy workers are more productive, so health spending directly builds human capital.