First, the return on investment of human capital exceeds that of physical capital. Schultz believes that the rate of return of human capital and material capital investment is interrelated, and the relative investment of human capital and material capital is mainly determined by the rate of return. The high rate of return indicates that the investment is insufficient and additional investment is needed; The low rate of return means that the investment is too much and needs to be relatively reduced. When the return on investment of human capital and material capital is equal, it is the best investment ratio between them. When the two are not in the best state, we must add the aspect of insufficient investment. At present, compared with material investment, human capital investment is insufficient and needs to be increased.
Secondly, human capital plays a role of mutual substitution and complementarity among various factors of production. Schultz believes that modern economic development can no longer rely solely on natural resources and human physical labor. In production, it is necessary to improve the intelligence level of manual workers and increase the composition of mental workers to replace the original factors of production. Therefore, the human capital formed by education will replace more other factors of production in economic growth. For example, in agricultural production, farmers' education and the research, popularization and application of agricultural science can replace the role of part of land and promote economic growth.
Third, specific quantitative calculation. It further proves that human capital is the source of economic growth. Schultz calculated the national economic growth of the United States from 1929 to 1957 with his own "economic growth surplus analysis method", of which about 33% was contributed by human capital formed by education. Education promotes economic growth by improving people's ability to cope with imbalances. The so-called ability to deal with unbalanced state refers to people's response and efficiency to the change and renewal of economic conditions, that is, people reconsider and rationally allocate their various resources, such as property, labor, money and time, according to the change of economic conditions. Schultz called this "distribution ability" the ability to deal with imbalance. The acquisition and improvement of this ability mainly benefits from the role of human capital formed by education. This "distribution ability" can bring "distribution benefit", thus promoting the economic growth of individuals or society and increasing the economic income of individuals and society.
The second point: education is also a factor that makes the social distribution of personal income tend to be equal. Human capital can make economic growth and increase personal income, thus reducing the social distribution inequality of personal income. Because education can improve people's knowledge and skills, improve production capacity, thereby increasing personal income and changing personal salary and salary structure. Schultz believes that the root cause of personal income growth and personal income gap narrowing is the general improvement of people's education level and the result of human capital investment. The impact of education on personal income is mainly as follows:
First of all, the difference in wages is mainly caused by the difference in education level. Education can improve the income ability of workers, affect the social distribution of personal income and reduce the imbalance of income distribution.
Secondly, the improvement of education level will slow down the relative income difference caused by different education. Schultz believes that with the extension of compulsory education and the increase of enrollment rate of secondary and higher education, the imbalance of personal income in society will tend to decrease.
Thirdly, the increase of human capital investment can also make physical capital investment and property income tend to decline and make people's income tend to be equal. Schultz pointed out that in the national economic income, the proportion of relying on property income is relatively reduced, while the proportion of relying on labor income is relatively increased, and the contribution of human capital to economic growth is also increasing.