Role of Human Skills in Economy

Investment in Human capital is considered as one of most important pillars of economic growth in any economy. The purpose of the paper is to measures the effects of human capital on the economic growth of Indian economy. The measurement of human capital as the determinant of economic growth is analyzed and measured under the headings of education and health component of human capital. In order to measure the effect of the human capital on the growth of Indian economy we used three regressions models. The first regression model used captures the relation of education human capital with the growth. Model second is used to measure the health human capital and economic growth. Finally model third is used to measure the human capital and growth. In the third model both education and health human capitals are used as regresses for growth. The estimated coefficients revealed that the stock of education human capital contributes to economic growth positively and notably. The study concludes that investment in education increases the enrolment ratios and enrolment ratios affect the economy in positive and in significant way. Similarly it was found that there exists a positive relationship between health human capital and economic growth as well. The study explores revealed that investment in health increases the life expectancy that contributes to economic growth in remarkable and positive way. The Results thus confirmed the literature evidence that human capital has a remarkable impact on the economic growth of India.