Moving Human Capital Inside the Production Boundary

Moving human capital inside the production boundary requires human capital and its services to be treated as outputs of production processes. The primary input of labor ceases to exist, and it is necessary to redirect goods and services consumed by it as inputs in the industries that now produce human capital and its services, i.e. human time. A description of the total production system, which includes these industries, is given. This description is formalized by means of the dynamic input-output model. The potential uses of this approach are discussed. Two well-known approaches to include human capital in national accounts are discussed against this background. They lead to exceptionally high rates of return on inputs in human capital and, logically, also leave substantial resources available to net additions to the stocks of human capital