Question

Why is human capital less mobile across countries than physical capital?

Options

• Because of nationality and cultural factors

• Because human capital formation is a purely technical decision

• Because human capital can be traded internationally

• Because human capital depreciates with use and technological change

Answer 1

While physical capital is highly mobile across countries subject to trade rules, human capital faces additional barriers: people's nationality and cultural factors tie them to their home countries, making their movement across borders less free.