Human capital: methodological aspects of the analysis

The article discusses socio-economic concepts of the analysis of human capital and in particular on the methodology of the analysis of its components such as education and health. Separately, discusses issues related with investing in human capital development.

Article is prepared on subject materials: "Development of the human capital of monotowns in modern conditions of industrial and innovative and integration development of Kazakhstan: methodology and practice" according to the program of the basic and applied researches financed within program and target and grant financing of MAUN RK for No. 5163 GFCh for 2015 - 2017 years.

Development of human capital is a process which is carried out as a result of investing of the state, organizations (enterprises) and the man himself in the formation of the stock of knowledge, skills, abilities and health, and influencing the growth of labor productivity, improvement of employment structure, increase in revenues and improving quality of life of population.

The system of education acts as a special social institution that provides the formation and development of human capital. In the second half of the twentieth century, Western researchers have shown that investments in education and training of highly qualified specialists not only leading to development of the abilities of individuals, but also provide social welfare in general. The greatest influence on the concept of human capital in this context have made researchers as Theodore Schultz, Gary Becker, George Mintzer, Lester Carl Thurow, John Kendrick, as well as others. Currently, in developed countries investments in education and research is given particular importance, they are considered as necessary and bring dividends in the long term. Thus, the system of education and science occupies one of key positions in the development of human capital.

For Gary Becker's in human capital are important not only production skills but also knowledge of the individual, as well as his motivation. According to him, human capital gives a person certain benefits, which serve as the higher revenues (earnings) and "cultural and other non-cash benefits" [1, p.245]. Economic efficiency of education is high. An employee, who has received it, has great opportunities to obtain high incomes. Additional income from education is calculated as follows: income from people who have graduated from college, deducted income of employees of secondary general education. Consequently, the economic efficiency of education is the difference between lifelong income of employees who have graduated from college, and employees who have received secondary education. The costs of education will act as the direct costs (costs on tuition, accommodation, etc.), and the alternative costs - lost income during the study. And the return on investment in education is the ratio of revenues to costs, which according to his calculations make up 12-14% of the annual profit. "One way of investing in human capital - improvement of physical and an emotional condition of human", and the "emotional condition is increasingly coming to be seen as an important determinant of earnings" [1, p.249].

On the basis of extensive statistical material G. Becker has shown that education is the basis for of increasing of hired workers incomes, employers and the state as a whole. Currently, in Western countries, not only the employees, but businessmen and politicians began to consider investments in education as long-term investments yielding dividends.

According to the researcher of "new economy" K. Henning: "The decisive factor became the human capital, or rather its ability to turn information into knowledge. Physical capital has not disappeared but has lost its dominant position" [2, p.4].

Daniel Bell is considering modern society as a society, "in which economy the priority has moved from preferential production of goods to production of services, research, the organization of the education system, and improving quality of life; in which the class of technicians became the leading professional group and, most importantly, in which innovations... are increasingly dependent on achievements of theoretical knowledge…" [3, p.202].

In such societies, according to D. Bell, the role of knowledge is increasing. Because: "When knowledge in their systematic form involved in the processing of practical resources (in the form of the invention, or organizational improvements), we can say that it is knowledge, not labor acts as a source of value" [3, p.215]. At the same time knowledge is widely considered "knowledge is not a thing, not a process, and some special system of relationships, including the relationship between the signs and out signs phenomena, signs and activities and, finally, the relationship between the different signs structures" [3, p.161].

D. Bell pays attention not only to knowledge, education, and science and technology. He writes: "I am standing on that information, the theoretical knowledge is the essence of the strategic resources of the post-industrial society. In addition, in their new role they are representing a turning points in modern history. The first turning point - changing nature of science itself. Science as a "general knowledge" has become the main productive force of modern society. The second turning point - the liberation of technology from its "imperative" nature, an almost complete transformation into an obedient instrument. Modern technology opens up many alternative ways to achieve a unique and at the same time different results, with an incredibly increasing production of material goods. These are prospects, the only question is how to implement them" [3, p. 285].

In post-industrial society become dominant values of science, education and developed technologies. Highlighting the increased role of knowledge, Daniel Bell and Alvin Toffler are talking about a society based on knowledge, using terms like "knowledge society", "the knowledgeable society", "knowledge-value society".

Thus, economists and sociologists have shown that the development of human capital depends of a system of education and science. Exactly they contribute to the formation and development of industrial and innovative economy, which can't exist without highly skilled management personnel, scientific and engineering specialists.

In the conditions of globalization economically developed countries are oriented for attraction prospective scientists and highly qualified specialists in different areas. The "brain drain" has become an actual problem for many countries (in particular with regard to post-Soviet countries), as it slows down the development of the economy. Without solving this problem, these countries will not be able to be competitive on the world markets.

In industrial and innovative conditions the economic growth is identified with scientific and technological progress, in the first place with professional quality of labor resources [4, p. 35].

The lack of highly skilled managers and specialists of engineer and technical profile who can design, implement, and realize high-tech investment projects, the low level of qualification of workers operating equipment and vehicles in the process of modernization of production processes, coupled with the high wear and tear of fixed assets of most enterprises leads to low productivity of labor [5].

Education plays a key role in the formation of human capital, but its efficiency is depends largely on the scientific achievements, scientific research and development, thanks to which society adapts to changing conditions and ensure development. In the system of education and science there is the production and reproduction of knowledge, transferring it to individuals, whereby they are included in the processes of social production, thereby ensuring economic development. Here, the problem consists in the quality of labor force, which is largely determined by the level of knowledge, the quality of training programs and learning technologies, information technologies, the level of development of science, as well as the motivation of the individuals themselves.

At the modern stage of development the integration of education, science and industry, the development of humanitarian, technical, professional training, information technology, higher education, postgraduate education, based on modern science and technology, are among of the priority directions of development of the industrial and innovative economy. They are largely dependent on the quality of human capital.

Health is also the basis for the accumulation and development of human capital of the country. This involves both the physical and the spiritual health. In the case of a high level of population health and individual health investments in human capital more effective, and vice versa, the lower the health level, the less effective investments.

The World Health Organization defines health as a "state of complete physical, mental and social well-being and not merely the absence of disease or infirmity" [6].

Russian researcher Ilyinsky I.V. is considering health as the national capital, which is the investment into the person, aimed at the formation, maintenance and improvement of its overall health and ability to work in particular. Time of human life and its ability to work are extending investments in health [7].

American economist M. Grossman stressed the link between education and health. According to him, individuals with better educational preparation more efficient in the use and production of its "capital health", as lead a more healthy compared to other lifestyle, engaged in safer and less harmful activities, wiser use of medical services, and in general, more careful about their health.

M. Gauquelin Indore also showed the link between education and health. According to him, a quality education is necessary to create a new human capital, but this is impossible without health as healthy people are more productive and able to pay more attention to intellectual development and labor activity. In addition, with increasing the average life expectancy rises the level of education [8].

Accumulation of human capital depend on state funding of the health system, but in addition, a significant impact on it have actions of employers and employees themselves, aimed at maintaining health. As marks L.A. Elovikov, human capital by 60-70% is created by carrier of abilities to work [9, p. 56]. This model assumes joint and several liability of the state, the employer and the citizen because without comprehensive participation of all stakeholders is impossible to achieve a meaningful final result. Indicators of health system development level of the country, according to international standards, are: infant mortality rate, total mortality of population rate, total fertility rate and expectation of life at birth. On them are oriented in determining the quality of human capital. In addition, on its quality is affected by the incidence, its types and proportion of persons with disabilities in the population structure.

According to the World Health Organization's economic development is achieved through four main health factors: disease prevention, thereby released resources that are spent on the treatment of patients; the increasing number of school children and improving their performance; possibilities of using of natural resources that were not available due to diseases of the population and reducing production costs by employee illness.

Thus, the Institute of Health forms a biological and physical quality of human capital. At the same time the health capital, is closely intertwined with the capital of education.

The key role in establishing the requirements for human capital and the creation of common conditions for its development belongs to the state. This is due to the fact that the state is the guarantor of stability and socio-economic development. At the same time it exactly gets maximum return on the human capital.

Anthony Giddens in his work "The nation-state and violence" in 1985 especially emphasized the role of the national state as the bearer of the administrative authority [10]. At the same time it is precisely this authority gives the state resources for the development of human capital.

American economist Douglass Cecil North [11] considers the social institutions as a social process control systems aimed at maximizing wealth. According to him, the institutions "define the rules of the game" for both individuals and for the organization as a whole and thereby provide an opportunity to make a profit. It emphasizes mutual influence state structure and economic system. State system has the ability to directly affect other subsystems of society, to carry out their modernization, to manage social processes and stimulate development of the economy.

Framework requirements set by the state to human capital depend on the level of socio-economic development of the country, government priorities, and political values. Because modern developed countries focused on the development of innovative economy, the knowledge economy, the development of which is impossible without highly qualified specialists, high- tech products, scientific research and development, the state provides the development of "human-form sector", that is, the development of education, science (including scientific research and development activities), health and culture. It provides funding for these spheres their legal regulation and the development of state programs, as well as creating the institutional and legal basis for their modernization.

The institutional mechanism of human capital development at the state level include the financing of its production and reproduction, development of models of interaction between the state, business and society, legal regulation of issues of human capital, as well as support for the institutions of society, contributing to its development.

The main forms of investments in individual human are: investments in education (all levels), health, birth, upbringing and education of children, labor mobility and migration. And in the evaluation of human capital assets apply both economic methods (cost), and the methods of economic sociology (natural).

Since 1990, the United Nations uses the combined crosscountry indicator - the Human Development Index (HDI - Human Development Index). The annual UN report conducted socio-economic assessment of countries of the world, with the country divided into four categories: very high, high, medium and low human development index.

The notion "human capital" is defined by the United Nations as follows: "Human development is a process of expanding the choice spectrum. The most important elements of choice - to live a long and healthy life, to be educated and to have a decent standard of living. Additional elements of choice include political freedom, guaranteed human rights and selfrespect" [12]. Orientation is carried out at expanding rights, freedoms and human capabilities, his welfare and social justice.

The Human Development Index is an integral index, which takes into account medium-country statistical data. It includes: the health index (life expectancy), education index (its availability), Gross National Income Index, multidimensional poverty measure Index, socio-economic disparities and the Gender Inequality Index. According to the report of the Global Launch of Human Development Report 2015 Kazakhstan occupies 56 place (in 2014 - 70th place) in the ranking (figure 0.788 (2014 - 0.756)) [12] and included in the list of countries with high human development index.

In general, the institutional approach focuses on the study of the basic structures and systems, institutional matrix, and stable mechanisms affecting the production and reproduction of human capital. This approach allows not only to research and analyze the social institutions, but also to correct the work of their management mechanisms. This approach is actual because it determines the progressive development of human capital in the conditions of globalization.

The functional approach is based on the functions which are carried out the human capital. This human capital is considering how accumulated by man formed in the process of investments, which includes knowledge, skills, abilities, health, motivation, used in the production process and improve the efficiency of labor and the growth of production, which ultimately leads to an increase in the individual income.

Modern functional approaches to human capital perceive the individual as an active participant in the production and reproduction processes. At the same the person - not just a resource, refundable by taking into account cost, but an active leader, capable of increasing both their own welfare and the welfare of an individual organization and the country as a whole. "Human capital is a measure embodied in the person's ability to generate income. It includes innate abilities and talents as well as education and acquired qualification" [13, p. 303]. At the same time the individual is capable of independent economic activities, selfmotivation and creative activity. Ability to work is an indispensable condition of human capital development, but without investing to develop them extremely problematic. "Investment in human capital - is any action that improves the qualification and abilities or, in other words, the productivity of the workers" [14, p. 171]. The growth of investments in human capital increases the welfare of the population and makes a profit (most often for the long term). But investing is not seen simply as an investment in education, science, health, culture and other spheres of society, and as an extension of freedom of the individual, including economic, through a change in the system of values and the distribution of the conditions of the newly created value. Only in this case the person himself is interested in the development of his own human capital.

As noted above, the functional approach is based on the forms of human capital, depending on their functions. From all of their plurality, the theory of human capital focuses on those that significantly affect the change in income of the population, health, education, creativity, professional abilities and skills [15]. They provide the growth of a social welfare. Moreover, under the welfare is understood not only the existence of material goods, but also existence of the ability to work itself, compliance with the distribution of material goods of society of human notions about social justice, the availability opportunities of choices of kinds of labor activity, working conditions, etc.

Human capital development has a social, economic, and socioeconomic result. Social result of human capital development leads to changes in the system of social stratification of the population with respect to indicators of social capital, and is manifested in the cultural development of the individual workers, labor groups and the organization as a whole. Socio-economic result development of human capital is an improvement of the social structure of society by transforming the professional differentiation of society, which leads to an increase in the professionalism of workers, reduce unemployment. The economic result of the development of human capital is in the growth of the efficiency of employees, increasing their income, increasing income of organizations where employees work, as well as by increasing the receipts of tax increasing income in the region and society as a whole.

An important aspect of the of human capital development, previously is not especially studied, is the corporate culture. According to researchers T. Deal and A. Kennedy [16], that it is a defining aspect of any economic organization. Therefore, human capital must be developed within the framework of its improvement. Because it is culture creates rituals, taboos, expectations, and as a result generates the human capital of the organization. Researchers of cultural differences C. Hampden- Turner, [17] and F. Trompenaars [18] were analyzed the global problems of value systems in different countries of the world and connect them with the forms of human capital development and their diversity.

An important factor of national competitiveness in the conditions of globalization is not only the land, natural resources and capital but also highly professional human capital. In the organizations in the process of human capital management employees are seen as a resource that needs to motivate, form and develop, as well as you need to fight. Management of such capital involves a common corporate culture, which is based on striving of all employees to make the organization more successful, that is due to organizational innovations, joint discussion and problem solving, support of initiative at all levels. The core of the corporate culture includes both the shared values (responsibility, respect, trust, fee for the results, etc.), and special labor requirements (initiative, adaptability, sociability, diligence, ability to make decisions, take responsibility for them, to work in command, etc.). Thus, corporate culture acts as an instrument of accumulation and development of human capital. It has a significant impact on labor productivity indicators, the efficiency of the organization, indicators of physical and mental health of workers exercising its influence on them through beliefs, norms, values, psychological climate, thereby forming a culture of labor and culture of behavior.

From the point of view of interest to human capital, corporate culture creates a qualifying potential worker (knowledge and skills), creative potential (cognitive and intellectual abilities), communicative potential (the ability to interact), the psychological potential (operability), moral potential (value and motivation), leadership potential and overall potential of employee to the development. Taken together they determine the human capital of the organization. Thus, corporate culture directly determines the human capital, allows effectively manage it, accumulate and develop.

Functional analysis as a method of economic sociology is to establish quantitative and qualitative composition of the human capital, its dividing by types of the subject activity and their study. It is, above all, about social, cultural, symbolic and intellectual capital, carrying out their specific functions.

One of the leading capitals of the modern enterprise in a market economy serves the intellectual capital. Its main function is to accelerate the growth of profit at the expense of the formation and implementation of knowledge ensuring the efficiency of economic activity. According to the russian economist and sociologist V.L. Inozemtsev intellectual capital consists of human capital embodied in workers' organizations in the form of their experience, knowledge, skills, abilities to innovate, a common culture, the company's philosophy, its inner values; as well as the capital structural, including licenses, patents, trademarks, organizational structure, databases and electronic networks [19, pp. 341-342]. Intellectual capital will integrate scientific and everyday knowledge of workers, gained experience, organizational structure, information networks and intellectual property. Investments in it becoming more common due to their high efficiency.

Researchers Leif Edvinsson and Michael Malone in their "Intellectual Capital" in 1997 broadly define this notion and carry to it almost all kinds of resources which are not amenable to conventional estimates, as the results of economic activities of corporations often lag behind the prices in the stock markets. According to them, the intellectual capital includes human and structural capital, which creates a high market valuation of companies [20]. Structural capital represents the legal and organizational structure embodying intellectual capital, and contributing to adaptation the organization to market requirements.

Integral parts of human capital, as noted above, are the health and education capital. Investments in health are expressed in the reduction of morbidity, increasing the period of ability to work, and as a consequence of maintaining of working capacity. Furthermore, a healthy person is more active in the development of his professional qualities and skills. Education is also reflected in the productivity of labor. Highly qualified specialists have a great amount of knowledge, skills and abilities, and as a result are able to bring the company greater profit.

Social, cultural, symbolic and intellectual capitals are relevant to the specific areas of the intellectual life of the community. To determine their borders rather difficult: they are closely intertwined, interrelated and often convertible. In aggregate of their data capitals define human capital, its qualitative and quantitative characteristics.

Accumulated by the individual capital is realized by its functional affiliation and applied in social reproduction, thus contributing to the growth of labor productivity and increasing ultimately not only individual incomes, but also welfare of the whole society.

In modern societies, is increasing interest in study of human capital, its analysis and forecasting of development. In this connection special importance acquires research methodology. For the most complete study of the human capital it needs to be based on an understanding of the multidimensionality of its manifestations, the integrity of its institutional and functional measurements and complex use of methods of economic and sociological analysis.


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Year: 2016
City: Karaganda
Category: Economy