Abstract
The development of human capital is the essential thing to determine a country’s growth. The existence of a country’s human capital quality depends on its education. The change of information in society is going rapidly and it is important to cope up with information and knowledge to all economic process. With the role of human capital in the modern societies many people are still unaware about the process of educational production. This paper is aimed to provide the process on human capital formation and educational attainment from microeconomic perspective. The literature reviews indicate that education attainment in the society are influence by many factors namely religion, family background, teacher’s quality and incentive, and the peer effects. In the empirical studies, Mincerian wage equation is the most widely used to analyze education and earnings. Besides from educational production function, to determine the quality of human capital, fiscal policy through taxation and educational subsidies have impact to the end result of students.
Highlights
The modern economy has indicated that education and human capital are the important elements. Fleischhauer (2007) highlights that developed countries are focused to have an economy that concentrates on skill-intensive in order to defend their leading position
This study is aimed to provide a better interpretation of the process on human capital formation and educational attainment from microeconomic perspective
We focus on rate return of education from microeconomics point of view that influence the amount of human capital investment at the individual level
Summary
The modern economy has indicated that education and human capital are the important elements. Fleischhauer (2007) highlights that developed countries are focused to have an economy that concentrates on skill-intensive in order to defend their leading position. The modern economy has indicated that education and human capital are the important elements. Fleischhauer (2007) highlights that developed countries are focused to have an economy that concentrates on skill-intensive in order to defend their leading position. The existence of country’s human capital quality depends on its education. There is a big difference on the education system in developed and developing countries. Provost (2014) in The Guardian reports that one in four adults in developing countries is not able to read a sentence. The access to education is still poor and 175 million of young people lack of basic literacy skills
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