Differentiate between human capital and physical capital. Ans. Difference between human capital and physical capital:

Human Capital

Physical Capital

1. Human capital refers to the stock of skill and expertise of a nation at a point of time.

2. Human capital is the cause behind physical capital.

3. Human capital has relatively more economic value.

4. Human capital is intangible.

5. Human capital cannot be sold in the market. Only the services of human capital are sold in the market.

6. Human capital is inseparable from its owner.

7. Human capital is not perfectly mobile between countries as movement is restricted by nationality and character.

8. Human capital benefits not only the owner but also the society in general i.e it creats both private and social benefits.

9. Depreciation in human capital takes place with aging, but can be reduced to a large extent through continuous investment in education health etc.

1. Physical capital refers to the stock of produced means of production.

2. Physical capital represents production capacity of a nation.

3. Physical capital has relatively less economic value.

4. Physical capital is tangible.

5. It can be easily sold in the market like any other commodity.

6. Physical capital is separable from its owner.

7. Physical capital is completely mobile between countries except for some artificial trade restrictions.

8. Physical capital creats only private benefits.

9. Depreciation in physical capital takes place due to its continuous use and change in technology.