Probably the most important and most original development in the economics of education in the past 30 years has been the idea that the concept of physical capital as embodied in tools, machines, and other productive equipment can be extended to include human capital as well (see Schultz 1961; Becker 1964). Just as physical capital is created by changes in materials to form tools that facilitate production, human capital is created by changes in persons that bring about skills and capabilities that make them able to act in new ways.

DEFINE: Frames 'human capital' as the extension of physical capital theory to skills and capabilities acquired through education and training.

Coleman, SocialCapitalCreation-1988, loc. 67