Primary education cause an increase of 40% in labour productivity, secondary education 10% and higher education 300%. This observation quite rightly highlights the importance of education in labour productivity. As children drop out from the school, they are forced to take up small and menial jobs and work as labourers at construction sites, factories, etc.This is definitely a loss to human capital. If these children were allowed to complete their education, it is possible that some of them would have become doctors or engineers or government officials. Their productivity would have been more and they would have contributed towards human capital formation. So, school dropouts are definitely a loss to human capital.