Question

explain any three difference between physical capital and human capital

Answer 1

Physical Capital, is used to mean, the company’s non-human assets like plant and machinery, building, computers, office supplies etc. that assist in the production of goods and services. On the contrary, human capital is defined by collection of knowledge, talent, skills and abilities possessed by an employee or a group of employees working in an organization.
Physical capital is tangible in nature, i.e. it can be seen and touched. Unlike human capital is intangible, that can only be experienced.
The creation of physical capital is an economic and technical process. Conversely, the formation of human capital is a social process, but it is also a result of conscious decisions taken by the entrepreneur in this regard.
Physical capital can be sold in the market directly, whereas human capital cannot be traded in the market, rather the services are sold.
Physical capital can be separated from its owner easily. On the other extreme, human capital is inseparable from its possessor.
Physical capital is usually mobile, but some restrictions occurs out of trade barriers imposed by different countries. However, when it comes to the mobility of human capital, it is not fully mobile between countries, as the mobility is restricted by nationality and culture.
While physical capital appears in the financial statement of the company, human capital is not shown in the financial statement.
Both physical and human capital undergo depreciation, but the reason is different, in the sense that physical capital is depreciated because of costant use. On the other side, human capital is depreciated out of ageing factor but can be reduced to a larger extent by making investment in health and education.