The notion that investment in human capital is associated with better economic outcomes was coined in the U.S. and is assumed to translate equally across nations regardless of countries' socio-economic and political situation. The purpose of this study is to examine whether human capital tenets hold in European countries that transitioned from socialist regimes to a market-based economy. The modeling approach relied on 18 years (1994 to 2012) of country level data collected from the World Bank, in order to explore whether the increase in labor force with tertiary education (i.e., human capital) was associated with better economic outcomes in posttransition European countries, measured by GDP per capita. The comparison group was configured by European countries that did not experience the aforementioned transition during the same time period. Findings from the panel data estimations with country fixed effects consistently indicated that increases in the proportion of labor force with post-secondary education were not associated with better economic outcomes for post-transition countries, and that the opposite was true for non post-transition countries. Given that these findings problematize the applicability of the human capital theory in this region, the political economy theory of rent-seeking is utilized to help us further explore this issue.