The 10th MAC 2017

Multidisciplinary Academic Conference

A key Factor Influencing Course Selection: The Human Capital Theory

Dr. Yip Sui Ping, Sue
Hang Seng Management College, Hang Shin Link,
Siu Lek Yuen, Shatin, Hong Kong SAR China
Website: www.hsmc.edu.hk
E-mail: sueyip@hsmc.edu.hk

Abstract
A perennial debate in the economics of education is whether human capital theory can explain the private
demand for education and course selection. Human capital theory proposes that formal training improves the
productive capacity of individuals and that employers would recognise this extra level of education in their
selection.
This paper investigated whether post-secondary students were influenced by human capital theory when
choosing a study programme. The investigation used human capital theory as an analytical framework. Both
qualitative and quantitative approaches were employed for methodology. Data were collected via a
questionnaire survey and in-depth interviews were used to validate the questionnaire survey.
The principle finding of this paper important to the majority of students at ABC College (the pseudonym
used for the college on which this study is based) was that students’ perception of their BBA programme
would equip them for the job market. It has been found that human capital theory has influenced students’
course selection at ABC College. Students’ enrolment intentions were to do with investment. They invest in
education to get a better return. Overall, the study found that while students were not consciously aware of
the concepts of human capital, in practice they were influenced by this theory.

Keywords: Human capital theory, course selection

Introduction
Little is known about factors that influence student choice of specific disciplines and courses. What is
known at present is only piecemeal information of factors that are isolated from each other. Many studies
such as those carried out by Robert (1991); Van-Den-Berg (2001); Tilak (2002); Boateng and Ofori-Sarpong
(2002), Ayeni (2003); Merwe (2010) and Keeley, (2007) have looked at how the theory of human capital
influences students’ choice. Keeley (2007) said, ‘human capital theory makes it worthwhile for students to
stay on in school as all those unpaid hours in the classroom will translate into a job that compensates
workers for when they were learning and not earning’ (p. 30). This paper investigates whether students at a
specialist college have been affected by the human capital theory in their course selection.

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Human Capital Theory
The main argument of human capital theory was that there is a direct link between education, work and
productivity (Keeley, 2007; Robert, 1991; Tilak, 2002; Boateng and Ofori-Sarpong, 2002). Secondly, the
human capital theory also states that individuals treat the commodity of higher education as an investment
(Ayeni, 2003; Merwe, 2010). The notion is that higher education renders individuals more productive, an
outcome that is supposedly recognised by employers who consequently remunerate qualified personnel
according to their relatively higher marginal productivity (Taubman and Wales, 1973; Li et al 2011;
Psacharopoulos and Patrino, 2004; Hungerford and Solon, 1987). Thirdly, human capital theory suggests
that education directly augments individual skills and their ability to profit in the labour market (Boateng
and Ofori-Sarpong, 2002; Heywood and Wei, 2004). Based on these concepts of human capital theory, this
paper seeks to determine whether students at a specialist college were affected by these factors in their
course selection.

Methodology
Approximately 250 year one Bachelor’s in Business Administration (BBA) students (from ABC College)
were given a questionnaire for data collection. Out of this group, 12 students were invited to conduct depth
interviews.

Findings
The questionnaire survey (see Appendix A & B), was designed to find out how the course fits in with
employment and to answer the subsidiary question: The return to education factor. From the questionnaire
survey, students rated employment skills as their most important factors. The highest percentage rated by
students was for communication skills which had a mean of 4.07%. The second highest was for presentation
skills which had a mean of 4.02%. The third highest, rated by students, was for interpersonal skills. This had
a mean of 3.99%. The programme can act as a stepping stone to study further was ranked the fourth highest.
This had a mean of 3.84%. Both working experience gained from internship and teamwork were both rated
the fifth highest. Their average mean were 3.93%. The sixths highest factor, ‘time management’ had a mean
of 3.80% and the seventh highest given by students was for ‘negotiating skills’ and this had a mean score of
3.75%. The eighth and the nineth highest for factors: generally the course will help me with my career and
the BBA degree will improve my chances of getting an interview in the business industry had means of
3.67% and 3.65% respectively. The lowest mean score given by students was for ‘graduating from HSMC
will give student a higher chance of employment’. For this the mean score was 3.24%.
Based on the survey, it was found that students rated skills to be important. Skills rated by students to be
important were: communication, presentation and interpersonal and time management skills. Besides these,
working experience from the internship programme was also seen by students as being valuable. Students
felt that the BBA programme could allow them to acquire these skills and that they viewed these as
important for the job market. With regard to whether they could earn more with a BBA degree for the return
to education factor, it is hoped that the in-depth interview would address this. But for the moment it appears
that students saw employment skills to be more important than the return to education factor.

In-depth Interviews
In Appendix C (see Appendix C) - how the course fits in with employment, this part addresses the research
question how the course fits in with employment and answers the research question: The return to education
factor (human capital). It also addresses the gaps in the questionnaire survey.
For the first question, do you think your course will give you a greater chance of getting into business? All
twelve students at the interview said that it will definitely give them ample opportunity of getting into
business. They argued firstly, the subjects they are learning are all business subjects. Secondly, the
internship programme is already allowing them to get access to companies as well as gaining good working
experience. And thirdly, the skills and knowledge they learned from the course will increase their chances of
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getting closer to the business world, skills such as: communication, presentation, interpersonal, teamwork
and time management skills are all useful for work. Their answers validate the questionnaire survey, as skills
were ranked high in the survey (see appendix A).
The answers given by students in the above also answers question number two in Appendix B for what kind
of skills do students expect to learn/acquire from the BBA programme. From the above, it listed the skills
they expect to acquire from the course.
Do you think employers prefer to hire employees with a tertiary education background was the next question
in Appendix C. All the students at the interviews believed that to be true. Three students at the interview
highlighted this point:
‘Yes my mum always says if I don’t have a degree I cannot compete with others. If you read a C.V.
without a degree no one will want you, the world is cruel’ (Samantha Wong);
and another student:
‘Yes it is important since my mum works in a bank. She interviews people every day, so my mum
tells me if I don’t have a degree, I won’t stand a chance’ (Joe Li).
A student (Heidi Sung) further added this point:
‘Yes companies prefer people with a tertiary degree and even prefer you to have higher qualification
say a MA or a PhD’. This point echoed the view of Freida Chan:
‘…the more knowledge you gained, the more chances and opportunities exist for you.’
The last question I asked in this section was relating to how the BBA course fits in with market demand? All
students said the skills they acquire from the course such as presentation, communication, interpersonal
skills, teamwork and time management are skills which will equip them for the job market. In addition,
exemptions of accountancy papers and internship training should also add weight to their employability,
thus the course they argued does fit in with market demand. This view concurred with the questionnaire
survey (for another section of the paper) as it was rated with a mean of 3.62. This line of thinking was
summed up by both Samantha Wong and Wing Ip:
‘The kind of skills acquire from the course are business knowledge, social skills, social-networking
(meaning getting to know companies through the internship), and teamwork because of having
constantly to do projects and working together and presentation skills as well as communication
skills’.
‘Apart from the conceptual knowledge, the course provides a lot of team-working experience. It also
provides, language and communication skills. We need to work on a tight schedule so we learn time
management skills. We could also obtain exemptions from some business professional exams as
well’.

Discussion
The main argument of the human capital theory was that there was a direct link between education, work
and productivity. Secondly, the human capital theory also states that individuals treat the commodity of
higher education as an investment. The notion is that higher education renders individuals more productive,
an outcome that is supposedly recognised by employers who consequently remunerate qualified personnel
according to their relatively higher marginal productivity. Thirdly, human capital theory suggests that
education directly augments individual skills and their ability to profit in the labour market. In the following,
this view would be discussed to see if it can explain the BBA students’ enrolment decisions and intentions
i.e. the notion that individuals treat the commodity of higher education as an investment.

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From the interviews and surveys most students felt the BBA programme could benefit them because what
they learn from the course would fit in with market demand in Hong Kong i.e. an international financial
centre. Most students felt they could gain conceptual knowledge from their course ‘…gain knowledge of
stocks and shares and get to know how the bank works etc.’ From the questionnaire survey, BBA students
have ranked certain skills they thought important which they could acquire from the programme. These
skills included: communication, presentation, interpersonal and team-work, which are all workplace skills.
Additionally, students also felt that the working experience gained from the internship programme was
important, since it could help them find employment by ‘having a foot in the door’. This showed that BBA
students did think about the knowledge and skills they could gain from the course that could help them in
the future. My findings confirmed the work of Boateng and Ofori-Sarpong (2002), who argued that demand
for tertiary education is driven by the knowledge that is necessary for work in sectors where wages appear to
be higher and jobs more stable. My findings are consistent with Boateng and Ofori-Sargong’s. From this, we
could argue that these BBA students did see higher education as an investment; they invest to gain skills for
the workplace. This shows there is a definite ‘link between education and work’. Furthermore, in a study
carried out by Psacharopoulos (1982), he found that students’ expectations of the labour market were in tune
with actual market conditions, and the social demand for different fields of university specialisation is
closely linked with expected economic rewards. Merwe (2010) also confirmed this aspect. So it appears that
the reason for BBA students’ enrolment was due to the acquisition of skills for the work place, owing to
Hong Kong’s unique market. For them, it was definitely an investment for work.
Further evidence can also be found from students’ comments (from another chapter of the study which is
outside the scope of this paper) in response to the following question - ‘What are your parents’ expectations
of you?’ From what most students had said, they confirmed the reason for their demand for higher education
was due to employment. Here were some of the comments made:

 ‘can earn a living in the future, bring home the bacon.’

 ‘to get a bachelor’s and master’s degree in business in order to be more competitive in the job
market--have a good prospect; have a nice job in the future.’
 ‘I can have a better future after finishing my degree etc.’
With regard to the question if there was a direct link between education and productivity i.e. human capital
theory states that higher education renders individuals more productive. From what we have seen, or shall
we say, the human capital theory actually work act as a powerful measurement to explain an individual’s
educational investment. It appears then that education does render individuals more productive, not in the
physical or productive sense, but in the sense that employers use education as a measuring stick to ‘judge’
potential employees and pay them according to their education level or attainment (Spence, 1973; Arrow,
1973; Stiglitz, 1975 and Psacharopoulos and Patrino, 2004). The extra level in education serves as a
measuring rod to screen or select suitable applicants.
Let us now look at the next part of the human capital theory which addresses whether employers will pay
more to potential employees if they have invested in their education. Were the BBA students aware of this
when they decided to obtain a degree? One of the questions asked in the interview was based on this: Do
you think employers will pay more to people with tertiary education and do you think employers prefer
employees with a tertiary education? From the survey it was ranked high, with a mean of 3.60, indicating
that students did think that employers prefer employees with a degree. And comments of students have also
reflected or confirmed this line of thinking:
‘A degree is equal to gaining money’ (Joe Li).
‘Yes, nowadays Hong Kong has many degree holders. If you are only a DSE (Hong Kong Diploma
of Secondary Education) graduate (meaning from secondary schools) your competitiveness will be
low. Continuing to study, to equip yourself, to learn a special skill, or to be more professional will be
better’ (John Chan).

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The above indicated that most students felt that having a degree was important and that employers would
take tertiary education into account. Many studies, such as the work of Ayeni (2003), have confirmed this
aspect. Ayeni sees education as an investment which has future benefits in the creation of status, job security
and other benefits. Therefore, to the BBA students obtaining a degree would be a passage to earning, a good
investment in education. It definitely showed that students were consciously aware of the human capital
theory. However, regarding how much they could earn, how successful they could become is a different
matter as indicated in another findings chapter where it was found that students were rather pessimistic
about their ability to earn.

As a concluding remark, it has been found in this study that human capital theory has influenced students’
course selection at ABC College. Students may not know what human capital theory is but their intentions
were to do with investment. They invest in education to get a better return. It was also found that the
students’ perception of their BBA programme was that it would equip them for the job market. From the
findings and in-depth interviews, students listed working skills as significant factors. These working skills
included: interpersonal, communication, teamwork, and conceptual knowledge. Students also felt the
working experience gained from the internship programmes would be an advantage in giving them ‘a foot in
the door’- access to employment. Thus, this proved that students’ intentions were linked to human capital
theory.

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Brief Biography
Dr Yip was awarded her Bachelor degree in Historical and Critical Studies from the University of Sheffield
in England. She gained her Postgraduate Diploma of Education from the Chinese University of Hong Kong
upon her return. This was followed by a Master degree in English for Specific Purposes at the City
University of Hong Kong. She received her doctorate degree from the Faculty of Education, University of
Nottingham, UK, in 2014.
Her research area is looking into student’s perception of studying business in relation to their employment,
in particular human capital theory.

References
Arrow, M. (1973). Higher Education as Filter. Journal of Public Economic. Vol. 2. (3), pp. 193- 216.
Ayeni, O. (2003). Relationship between training and employment of Technical College Graduates in Oyo
State between 1998-2001. University of Ibadan, Ibadan.
Boateng, K., & Ofori-Sarpong, E. (2002). An Analytical Study of the Labour Market for Tertiary Graduates
in Ghana. World Bank / National Council for Tertiary Education/ National Accreditation Board
Project, Ghana.
Heywood, J., & Wei, X. (2004). Education and Signaling: Evidence from a Highly Competitive Labour
Market. Education Economics, 12.
Hungerford, T., & Solon, G. (1987). Sheepskin Effect to the Return to Education. The Review of Economics
and Statistics. Vol. 69. No. 1.
Keeley, B. (2007). Human capital – How what you know shapes your life, OECD Insights: OECD
Publishing.
Li, Fengliang, Zhao, Y., & Morgan, W.J. (2011). The Rate of Return to Education Investment in China: a
Comparative Commentary. Education, Knowledge and Economy.
Merwe, A. (2010). Does Human Capital Theory Account for Individual Higher Education Choice?
International Business & Economics Research Journal. Vol. 9, No. 6.
Psacharopoulos, G. (1982). Student Expectations and Graduate Market Performance in Egypt. Higher
Education, Vol. 11.
Psacharopoulos, G., & Patrinos, H. (2004). Returns to Investment in Education: A Further Update.
Education Economics, Vol. 12.
Robert, B. (1991). Economic Growth in a Cross Section of Countries. Quarterly Journal of Economic 106
(2), pp. 407-414.
Spence, M. A. (1973) Job Signalling. The Quarterly Journal of Economics, Vol. 87 (3), (Aug 1973), pp.
355-374.
Stiglitz, J. (1975). The Theory of ‘Screening’ Education and the Distribution of Income. The American
Economic Review. Vol. 65, No 3, pp.283-300.
Taubman, P., & Wales, T. (1973). Higher education, mental ability, and screening.
Tilak, J.B. (2002). Building Human Capital in East Asia: What Others Can Learn. National Institute of
Educational Planning and Administration.
Van-Den-Berg, H. (2001). Economic growth and development. International Edition. New York. McGraw-
Hill Companies.

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Appendix A

A survey was conducted to determine how the BBA course fits in with employment and it answers the subsidiary question: The
return to education factor.

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Appendix B - Part II: Source of Information and Influence

Part II: Source of Information and Influence

The following are possible reasons accounting for your choice of study. Please indicate
how much do you agree or not agree to the statements listed below by circling the appropriate number for each to the follow scale:

5 Very agree
4 Moderately agree
3 Neutral
2 low agreement
1 Not agree

C) How the course fits in with employment Very Not

Agree Agree
1) Generally the course will help me with my career. 54321

2) The BBA degree will improve my chances of getting an interview in 54321

the business industry.

3) Employers will pay more to people with tertiary education. 54321

4) The following skills learnt from the course can help me with my career:

4i) Teamwork
4ii) Interpersonal skills 54321
4iii) Communication 54321
4iv) Time management 54321
4v) Presentation skills 54321
4vi) Negotiating skills 54321
54321
5) The working experience gained from the internship programme
can give me more opportunity of employment.
54321
6) The programme can act as a stepping stone to study further in
the future. 54321

7) Graduating from ABC College will give you a higher chance of

employment. 54321

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Appendix C - In-depth Interview
How the course fits in with employment

To find out how the course fits in with employment and to answer the subsidiary research question: The return to education factor
(Human Capital). The following questions were used:

1. Do you think your course will give you a greater chance of getting into business? Why?

2. What kind of skills do you expect to learn/acquire from the BBA programme?

3. Do you think employers will pay more to people with tertiary education and do you think employers prefer employees
with a tertiary education?

4. How will your course fits in with market demand?

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