THE FORMATION OF THE HUMAN CAPITAL CONCEPT: A STAGE IN THE HUMAN CAPITAL THEORY DEVELOPMENT
THE FORMATION OF THE HUMAN CAPITAL CONCEPT: A STAGE IN THE HUMAN CAPITAL THEORY DEVELOPMENT

Summary/Abstract: The evolution of human capital theory can be conditionally divided into three main stages – formation of the concept of the role of man in the economy, theory of human capital and modern development of the theory of human capital, each stage can be further detailed into separate phases. The purpose of this article is to present the second phase of the first stage of the development of human capital theory. The formation of the concept of human capital, preceded by the phase of the emergence of early ideas about the role of man in the economy, represents the first stage of the development of the theory. Within the second phase of the first stage, this article presents the ideas about the valuation of man of economists from different economic schools, starting with William Farr. The main ideas, contributions and mathematical apparatus proposed by William Farr are presented, through which, through the approach to capitalizing future labor income, the value of man in the economy can be calculated. Next, the contribution of Ernst Engel is summarized, according to which a more accurate assessment of would be obtained if all the costs of raising, training and supporting an individual until reaching working age were summed up. The building blocks of Rudolf Goldscheid, who is a supporter of the so-called cost approach to calculating value, are also examined. The shortcomings and criticisms of the cost approach to valuing a person are analyzed. The contributions of Louis Dublin and Alfred Lotka are systematized and the mathematical formula they proposed for calculating the value of a person is presented. Special attention is paid to the early developments of Jacob Mintzer, which have a serious effect on the understanding of the role and place of man in the economy, as well as the essence of the ways of valuing him for the needs of the economy. The views of Moses Abramovitz are also presented, which serve as the basis for the later emergence of the classical theory of human capital. In conclusion, the contributions of Milton Friedman and Simon Kuznets, who are also supporters of calculating the value of a person by discounting his future labor income, are analyzed. As a main conclusion from the conducted theoretical research, it can be stated that most of the analyzed authors are supporters of using the approach of capitalized incomes over the method of summing up the costs for the formation of a working individual.

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