In recent decades, human capital has become one of the earliest and best-known examples of the application of basic economic concepts to a broader set of topics in human and social behaviour, and Gary Becker was its leading proponent. This expansion of economic analysis has also been associated with a steady development of specialised economic fields that have tried to explore the potential and limitations of using economics to study a large array of topics (Backhouse and Biddle [2000]). In the case of human capital, this research has infused several of these applied fields, with particular emphasis on labour economics, the economics of education, growth economics, development economics, population economics, household economics, economic history, and the economics of health.

The role of education in human capital formation are as follows:

1. An educated society facilities better development than an illiterate one .

2. Education provide new aspirations and imports a modern outlook to children .

3. Education make sure people concerned for themselves and other, improve productivity and prosperity, and an riches life expensive.

4. It is not only contribute s towards the growth of an individual but also helps in the developing of the society as a whole.

5. Along with increasing the efficiency of the government, education also increases the national income along with other richness.

Becker argues that individual workers have a set of skills or abilities which they can improve or accumulate through training and education. As students (future workers) accumulate human capital, their value in the marketplace should increase as they bring more expertise and effectiveness to their job tasks. If human capital increases with additional education, a worker’s market value should theoretically increase in proportion to the amount of education he or she receives, often captured by the total number of credits accumulated.

(a)

Individuals not only acquire skills through formal education but also through job training. The human capital theory is common in this approach where an individual skill in production process and thus earning capacity requires formal (i.e., schooling) and informal training.

(b)

Why does formal schooling raise productivity? The answer is that it imparts fundamental skills and technologies such as reading, writing, mathematical calculation, physics, chemistry, engineering, etc.

(c)

Educated people can use other resources skillfully such as machines and new technologies. Also, they can decide quickly whether these resources and information are useful in raising productivity or lowering cost.

(d)

Education or schooling can socialize people into functioning effectively in society and economy. For example, schooling teaches people to be motivated, to be cooperative and patient, and to take roles in leadership, etc. This idea does not explain the increase in productivity through skill acquisition or knowledge of technique, but emphasizes mental and social aspects, which are likely to raise a group's productivity. In other words, it is useful in modern society where a team production is common, and concerned with an organizational explanation.

(e)

The human capital theory emphasizes the importance of both formal schooling and training in the production process. The concept of trainability suggests that an individual who received formal schooling is ready to receive training because he or she can learn from training quickly, and adopt it efficiently in the production process. At the same time, it is likely that a company can provide educated employees with training at cheaper cost because of the above properties.

Thus bithbeducation and people's innate ability are important for human capital.