Research On The Military Human Capital Investment From The Perspective Of Specificity

Specificity is an important property of the military human capital. The specificity of the military human capital reduces its ability of getting incomes beyond the military territory, so that the military human capital investment can not form the optimal investment in society through market dealing. Therefore, a corresponding system should be designed to achieve the optimal level. This thesis analyses the"hold-up" property of the military human capital investment from the perspective of asset specificity on the basis of the New Institutional Economics Theory by means of normative analysis, mathematical modeling and so on. In addition, for the problem of insufficient military human capital investment and the imbalance of the investment structure caused by "hold-up" property, this thesis focuses on studying how to make a reasonable military human capital investment sharing, protection, incentive and compensation mechanisms to achieve the balance of the specific investment and the investment structure.The research results are as follows:1.The "hold-up" property of the military human capital investment was analyzed theoretically and practically in this thesis. Through the investigation into the investment behaviors of the military college students and veterans in their service, it shows that the individual soldiers prefer the human capital investment available to military and civilian application and there exists the "hold-up" property of the military human capital investment. The theoretical research shows that the " hold-up" property of the military human capital investment derives from its value loss when used from the military field to civilian field. The essence of "hold-up" is the re-allocation of specific quasi-rents between armies and soldiers. It leads to the insufficiency of military specificity investment and the imbalance between the specificity and homogeneity of the human capital structure.2. The "make or buy decisions" model and the military human capital investment shared mathematical model, the purposes of which are to gain human capital, were established. The "make or buy decisions" model signifies that an army generally gets the military specific human capital in a self-made way, namely, they invest in cultivating soldiers in their own army. As to the military and civilian universal human capital, it can be "purchased", which means they can get the human capital by the way of commissioning colleges and universities to train soldiers or directly recruiting college graduates. The "Make or Buy Decisions" lies in the equality between the marginal costs of producing of the military investment for each of human capital and the balanced vertical scale of the marginal costs of purchasing. If the balanced vertical scale is large enough, the investment tends to manufacture. Otherwise, it tends to purchase. The sharing model of the military human capital investment shows that if cost-sharing coefficients K of the army and the military, two main sources of investment, are the exogenous variables of military policy, there will be conflicts between the investment motives of armies and soldiers. However, if cost-sharing coefficient K is the endogenous variable, soldiers' efforts are relevant to the investment income, which could stimulate soldiers' zeal.3. The protection mechanism of the military specific human capital investment was discussed in this thesis. In order to protect the military-specific human capital investment of both the employer (an army) and the employees (the soldiers), fixed wage contract is better than flexible wage contract. The degree of the specificity of the military human capital and the difference of the severability of the work has an effect on the governance mode of the military. For dedicated and strong human capital, such as certain special branches of the military, a long-term employment contract is helpful to promote investments in specific human capital; for general human capital, due to the external labor market having a relatively abundant supply, such as college graduates recruited into the army, the flexible short-term contracts can be taken. Our army always uses internal promotion to select talents. A good internal promotion system is helpful to maintain the stability of the officer corps and enhance military capability as well as their willingness to work hard.4. The incentive mechanism of the human capital investment of specific military is also discussed in this thesis. The distribution pattern of military human capital investment income depends on military organization and soldiers'forces on negotiations between them. In the army and the soldiers'static game, obviously cooperation is the optimal strategy, for which could achieve win-win in investment. When the military organizations and the soldiers conduct a number of limited games, at first, military has an advantage, which is originated from the differences of external negotiations over soldiers. Soldiers have a low power of negotiation, and therefore, their threat could be ignored. But with the increase of soldiers'human capital, the strengthening of their negotiating power and the increase of repeated times, military manpower capital owner gets bigger share of the income.5. This thesis discusses the compensation mechanisms of the specific military human capital investment. Essentially, the economic compensation is a method of giving a boost to the soldiers. In order to encourage soldiers to devote themselves to their work, the State should pay some economic compensation to costs related to career transition, opportunity, physic (psychology), risks when they retire. Therefore, it is necessary to improve the standard of the current economic compensation; to give a differential treatment of the proportion and standard of the compensation to the specificity and generality of the military human capital; to implement a policy that the retirements deficiency payments in different regions; to improve the economic compensation operating system and complete the supporting measures of the economic compensation and so on.6. The designed questionnaire verifies the main research conclusions. In order to validate the analysis basis and research conclusion of the theoretical model, the questionnaire for university graduates and people who are transferred to civilian jobs and set up business by themselves is designed. The empirical results support the conclusion in this thesis getting from the theoretical analysis of the research. Based on the theoretical and empirical research, the countermeasure of optimizing the investment of the military specific human capital is put forward, that is to go on the officer professional road with Chinese characteristics. The main suggestion given in this thesis is to establish the professional officer military human capital formation, use and exit mode in line with our Chinese national situation and military situation.