The Impact of Human Capital on Labour Market: Lithuanian Case

Abstract

The labour market analysis with parallel determinants of the investment in human capital, specify the necessity to incorporate both internal and external labour markets (internal and external factors) and its mutual interaction. Internal labour market reflects the particular company's or organization's labour supply, demand for employees, the search strategy, approach to an employee. In its internal labour market company specifies employee's assignment for specific duties and responsibilities (micro level). Conditions of employment depends on the company‘s ongoing strategy, i.e. whether the company invests in its employees’ human capital, their qualifications, training, establishment of career development opportunities, and efforts to reduce employee turnover, etc. Internal labour market contributes to the objective of maintaining staff: the employee will not look for another job if feels safe and valuable for an enterprise. Labour market and human capital are interrelated very closely. Wages depends on investment in human capital. Human capital consist of knowledge, skills and other characteristics (congenital and acquired), which depends on the individual and is determined by its productivity. The recognition that human capital is determined by an individual's ability to meet the labour market conditions, stands for thinking that years spent for studying, attending courses, training and others are appropriate investment for future – for the development of human capital.