Looking globally: the future of education
Looking globally: the future of education

This free course is available to start right now. Review the full course description and key learning outcomes and create an account and enrol if you want a free statement of participation.

Free course

Looking globally: the future of education

2.3 The human capital model

For the last fifty years, human capital theory has been widely accepted by many societies as the basis for educational policy making, planning and evaluation. Human capital theory is concerned with economic growth and assumes that human labour can be treated as a commodity. An improved education of the workforce is seen as an investment that will lead to economic returns both to the individual and, perhaps more importantly, to society as a whole. Thus increased educational expenditure and increased participation in education are believed to lead to improved economic productivity and economic growth.

Activity 2 Exploring the human capital model

Allow approximately 30 minutes

Watch this two-minute animation in which we outline the human capital model for you. It is worth watching the animation two or three times to ensure you have a good understanding of the model so that you can consider its implications for education. You should make notes as you watch, as you will return to reflect further on this model later in the course.

Download this video clip.
Skip transcript


The human capital model of education is an educational discourse worldwide. Parents encourage their children to work hard at school because then they will get a good job. Education is seen as a means to accrue individual wealth and to better a person’s life. It can even move a family out of poverty.
Under the human capital model, it is worthwhile for society to invest in education because it will ensure economic growth. Businesses and governments see spending money on science, technology, engineering, and mathematics, or STEM education, as a good thing in order to innovate and modernise so a country keeps pace with others and generates growth and more wealth within society.
The model focuses on investment and return. This focus on return means that investment in such things as art education is questioned, but research has found that the quality of education correlates more strongly with economic growth than simply the years spent in school.
Until recently, more education meant higher wages, and therefore, higher repayments in taxes. But in some countries, the economy and labour market are not strong enough to ensure this. Thus, investment in education no longer has a guaranteed return. And in some countries, schooling is not available to children with disabilities or learning difficulties, possibly justified by the poor return.
Next time you tell someone to work hard at school so that you can get a good job, think how far you’ve subscribed to the human capital model.
End transcript
Copy this transcript to the clipboard
Print this transcript
Interactive feature not available in single page view (see it in standard view).

Think about:

  • What are the important aspects of the human capital model for education?

More about the human capital model

Key global institutions, such as the World Bank, have promoted policies and practices underpinned by the human capital model. It is also associated with the ‘school effectiveness’ movement and international interest in standardised assessment. However, despite its influence over national education systems, increasingly there are criticisms of this approach.

Steven Klees (2016), for example, argues that the approach is fundamentally flawed for a number of reasons:

  • earnings do not reflect productivity
  • earnings are a poor measure of social benefit
  • estimating the empirical effect of education on earnings is almost impossible
  • critically, the underlying concept of economic efficiency is unsound.

Klees suggests that the human capital model pays little attention to structural problems and separates efficiency from concerns of equity and social value. The assumption that education causes economic growth and personal prosperity is now being challenged. Some recent data suggest the opposite: that economic growth enables more investment in education (Cobham and Klees, 2016).


Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has over 40 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus