Journal article Open Access

Productivity Effect from Investing in Human Capital, Part 1 of 2

Louangrath, P.I.

The purpose of this paper is to provide analyses of the effects of investing in human capital at the national and firm levels. The analysis of firm level focuses on labor productivity as the indicator for returns on investing in human capital. The scope of this paper is confined to one research question: “Under what circumstance should a firm invest in human capital?” Using per capita GDP as output and minimum wage as input, the national level analysis serves as a macroeconomic context for firm level study of productivity. For firm level analysis, revenue and cost of good sold were used to determine the level of productivity. Secondary data from the IMF was used for national productivity analysis. Financial reports from Stock Exchange of Thailand for the years 2014, 2015 and 2016 were used for firm level analysis. Thirty listed companies were randomly selected from 100 companies in the SET100 index. The findings show that the national productivity and efficiency levels are higher than those of the firms. Thailand has a national productivity level of 1.85±0.08 and labor efficiency of 0.85±0.08 while the sample firms show a mean productivity of  and labor efficiency: 0.46±0.39. The difference between the national and firm levels may be due to multiplicative effect. The firm’s labor productivity and efficiency is significantly lower than the national level, p < 0.003.

JEL Code: C51, C52, E01
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