Investment in human capital

Question

can be illustrated by a shift of the aggregate supply curve to the left.
increases structural unemployment.
increases labour productivity.
can be illustrated by a shift of the Phillips curve to the right.

Answer 1

Investment in human capital typically leads to an increase in labour productivity, as workers become more skilled, educated, and efficient. This can ultimately lead to a shift of the aggregate supply curve to the left, as firms are able to produce more output with the same level of input.

Additionally, investing in human capital can also shift the Phillips curve to the right. This is because as workers become more productive, wages may increase, leading to higher costs for firms. This can result in higher levels of inflation and a higher natural rate of unemployment. However, in the long run, the benefits of increased productivity and human capital investment tend to outweigh these short-term costs.