Analysis of Human Capital Effects: A Systematic Review of the Literature

Abstract

Economic theory presents human capital as playing a driving role in the process of economic and social development in the countries. Indeed, human capital is presented in several research works as a factor that promotes accelerated growth and sustainable development. Microeconomic analyzes also suggest that investments that improve the level of human capital contribute to improving the distribution of income, but also reduce poverty. However, these conclusions seem not to be shared by all researchers. This article aims to enlighten researchers and especially young researchers on the results of the analyzes of human capital’s effects on economic growth, income inequality, poverty and welfare. In order to achieve this objective, we collected information through search engines. This strategy required the definition of four equations with Boolean operators linking the key words of the study, i.e., ‘education’ with ‘economic growth’, ‘income inequality’, ‘poverty’ and ‘welfare’. Based on the results obtained, we note the existence of a consensus around the effects of human capital on poverty and welfare. However, the results obtained for agricultural productivity, economic growth and income inequality remain mixed. One observation made in the literature is the use of education quantity as a proxy of human capital. As the definition of human capital is broader, education quantity cannot be a good proxy. We suggest some avenues for new research based on a more global human capital index, because this one takes into account other dimensions such as stunting, mortality, average number of years of education and education quality