Explain the theory of investment in human capital and the specific role that education plays in the theory

The central view of human capital theory is that education is an investment that can be analyzed in the same sense that decisions to purchase capital goods are analyzed. Specifically, educational institutions take less-productive workers as raw materials and make them more-productive workers through the education process. The MRPs of the workers are increased; they are made more valuable to employers; and, in turn, the workers receive higher incomes, which can be viewed as a return on their investment in human capital.