One of the most powerful findings in modern economics is also one of the simplest: human capital amplifies everything.
A landmark study by Erosa, Koreshkova, and Restuccia shows that differences in human capital explain far more of the world’s income inequality than raw productivity or financial resources alone. In fact, a modest 5-fold difference in productivity can balloon into a 20-fold difference in income once human capital is taken into account.
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For us at the Academy of Life Planning, this is a wake-up call. It confirms what we have long believed: true wealth planning starts with people, not products.
🔑 Lessons for Planners
1. Human Capital is the Great Amplifier
Skills, knowledge, creativity, and wellbeing multiply the returns from financial capital. Ignoring them leaves wealth strategies incomplete.
2. Quality Matters More Than Quantity
The study highlights that it isn’t just years of schooling that matter, but the quality and efficiency of human capital formation. Lifelong learning, re-skilling, and wellbeing investments matter as much as formal education.
3. Inequality Compounds Through Human Capital
Poorer countries—and by analogy, households with fewer resources—fall further behind because low productivity limits both financial and human capital accumulation. Our role as planners is to break that cycle.
4. Leverage Local Advantages
Even where resources are scarce, opportunities exist. Services like training, mentoring, and digital education may be relatively cheaper and more accessible in some contexts. Planners can help clients turn these into stepping stones.
5. Experience Alone Isn’t Enough
The research finds that wage growth from experience alone does not explain income differences. Intentional investment in development is essential. Don’t wait for time to do the work—design growth deliberately.
🌱 What This Means for AoLP
For our members, this study reinforces the value of tools like the Human Capital Balance Sheet. We already map talents, purpose, and wellbeing alongside financial assets. This isn’t just good practice—it’s essential to creating lasting, meaningful wealth.
It also strengthens our call to society: wealth without human capital is hollow. By focusing on education, re-skilling, and empowerment—especially for people in transition or over 40 seeking sustainable livelihoods—we can help close inequality gaps and create a future where prosperity is shared.
At AoLP, we believe financial planning must evolve from managing portfolios to nurturing potential. Human capital is the true multiplier of wealth. Let’s make sure every plan we build reflects it.
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Together, we can redefine what financial planning means, transforming it from a service of dependency into a tool of empowerment. The M-Power Movement is not just about creating wealth; it’s about creating a fairer society where everyone has the opportunity to thrive.
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Join us today and be part of this transformative journey.
Steve Conley
Founder, Academy of Life Planning | Architect of the M-Power Movement.
Academy of Life Planning 