What factors contribute to human capital formation?
Human capital formation is the process of converting human resources into human capital through deliberate investment decisions. The main factors that contribute to human capital formation are investments in education and health.
Additionally, other significant sources include on-the-job training, which enhances labour productivity, migration, which helps individuals find better employment opportunities, and access to information regarding the job market.
These investments are made with the expectation that they will increase future income sources and accelerate the development process. Human capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.
Explanation
The textbook explicitly lists the sources of human capital formation as investments in education, health, on-the-job training, migration, and information. These factors convert human beings into human capital by enhancing labour productivity and increasing future income potential.