THEORETICAL FRAMEWORK

Labour Market is a term used by economists for all different market of labour.

Labour market theory are explanation of how to determine wages and how workers are

to be paid to their different jobs. Labour differs by type of work, skill level and location.

The market determined where people will work and how much did it cost. This is an

explanation of why one group of workers earns more than the other group (such as

skilled one vs. the unskilled). Most of the graduates are working, that means they take

part in the labour market.

Human Capital are all collective wealth of creative skills, knowledge, talents,

traits, judgment, and stored experiences embodied in the employees of a company.

Skills that bring economic value to the busses. The term human capital was used in the

late 1950 and early 1960. References spoke of human capital in terms of labour used to

produce manufactured goods. Theodore Schultz (1902-1998) expanded the term to

include the value for human potential. Adam Smith (1723-1790) in his book “An Inquiry

into Nature and Causes of the Wealth of Nations” states that improvements to human

capital through training, education and experience make the individual enterprise more

profitable, but also add to the collective wealth of society. Human Capital Theory puts

forward the concept that investments in education increase future productivity. Irving

Fisher was the first economists to develop a theory of capital (including human capital).

According to Fisher with his book “The Nature of Capital”, his aim was to supply the

long-missing link between the ideas and habits that govern business management and

theories of abstract economists. This theory emphasized that education is an asset to a

more opportunity in the field of market.

 Social Capital is defined both as the social resources available to a person via

their contacts (Lin 2001), and the perception the community that a person is trustworthy

and civically engaged (Putnam 1995). Social Capital Theory contends that relationships

are resources that can lead to the development and accumulation of human capital. For

example, a stable family can support higher education to his family that results to a

highly valued skills and credentials. In other term, social capital can be defined as the

social relationships that yields to a productive benefits.

Career Development Theory explain how a person can set up their career

development plan for success. Through a positive view of their ability, surrounding

themselves of positive persons, a person has a better chance of achieving their goals.

Some of the Career Development Theories are the Holland’s Theory of Career Choice,

the Super’s Developmental Self Concept Theory, Bandura’s Social Learning Theory and

the Ginzburg’s Theory of Career Development. In Holland’s Theory of Career Choice it

state that in choosing a career, people prefer jobs where they can be around others who

are like them. The Social Learning Theory of Bandura emphasizes the importance of

observing and modeling the behaviors, attitudes, and emotional reactions of others.
 Human Capital
Labour Market Theory
Theory

Social Capital Career

Theory Development
Theory

Figure 1. Theoretical paradigm