Question

What is the primary outcome of investment in children's education?

Options

• It allows human capital to be traded in the market

• It makes human capital separable from its owner

• It reduces the supply of healthy labour

• It raises future income

Answer 1

Expenditure on education is an investment that raises future income, exactly as a firm's investment in capital goods raises its future returns. This future income gain is what justifies treating education as a source of human capital.