Explaining Human Capital Composition and Formation Mechanisms: a New Conceptual Framework of Analysis

This paper summarizes the existing definitions of human capital from theoretical debates and empirical surveys and argues for the need to revise how human capital composition and formation processes are currently understood. A new framework is introduced to present human capital as a complex phenomenon consisting of five main elements: genetics, personality, motivation, knowledge, and skills. According to this conceptual framework, knowledge and skill formation both occur through learning and being exposed to challenging work environments.