Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 9: Investing in human capital: experiences from OECD countries and policy lessons
Raymond Torres1 In recent years, growing interest has been expressed in human capital as an engine of economic growth and social cohesion. The OECD is no exception in this regard. Indeed, when discussing prerequisites for economic growth, back in 2002, OECD ministers particularly emphasized the importance of investing in human capital. There are good reasons for this: evidence suggests that education and training, two major sources of human capital, are associated with better economic outcomes. The debate is now moving beyond these overall assessments and into a policy debate: what are the implications for policy? If human capital is so good for the economy, why is it that market forces are not strong enough to promote investment in this area? What are the market failures involved? The purpose of this chapter is, ﬁrst to document recent evidence on the beneﬁts of human capital, and second to address some of the policy issues outlined above. 1. WHY IS HUMAN CAPITAL SO RELEVANT IN TODAY’S ECONOMY? Since the bulk of the existing labour force will still be in the labour market in 10 to 15 years’ time, it is important to facilitate not only initial formal schooling, but to invest also in continuous vocational education and training. Due to rapid technological and organizational change, which necessitates a constant upgrading of workers’ skills and a constant change of work practices, it has become necessary to rapidly invest in human capital in a lifelong manner. Most OECD countries are rapidly shifting towards an...
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