The Effect Of Human Capital On The Growth And Convergence Of Total Factor Productivit(TFP)

The rapid development of China's economy for more than 30 years since the reform and opening-up created a miracle for the economy growth worldwide. However, two hidden questions rose:whether the rapid growth of China's economy is or will be sustainable, and whether the gaps between China's regions are or will be widening. The sustainable, rapid, balanced growth of the total factor productivity (TFP) is the key to these questions.This paper investigates the effect of human capital on the growth and convergence of TFP. The analysis is based on the provincial panel data during 1990-2008 which shows that how the average human capital, idiosyncratic human capital, coessential human capital,and human capital structure promotes the TFP growth, In order to evaluate human capital's contribution of TFP growth and convergence, summarize the role of the mechanism and laws.Innovations of the study are as follows:Firstly, human capital is the important factor to promote the growth of TFP. Till now, the literature only studied human capital as the role of technological absorptive capacity, lacked of the comprehensive evaluation of the role of human capital. This study fills the domestic research content blank.Secondly, this paper presents a comprehensive analysis thought, Analysis of the average human capital, idiosyncratic human capital, coessential human capital,and human capital structure on the role of TFP growth.Thirdly, in this paper, a variety of econometric analysis methods are used, including OLS regression, fixed-effects estimation, and quantile regression. This paper reflects the effect of human capital on the TFP growth by comparing the empirical results. This paper estimates a nonlinear specification for TFP growth that nests two specifications: exponential technology diffusion and logistic technology diffusion, and judges whether the regional TFP growth is in convergence or divergence state.This paper includes seven chapters and the main content of this paper deal with for four problems. These are:(1) On the basis of literature review, this paper theoretically analysis the effect of human capital on the TFP growth, and propose a comprehensive analytical framework. (2) Using a variety of methods to Measure the human capital and TFP growth across provinces during 1990-2008. (3) Using OLS regression, fixed-effects estimation, and quantile regression to analysis, by comparing the empirical results, reflecting the effect of human capital on the TFP growth. (4) Estimating a nonlinear specification for TFP growth that nests two specifications:exponential technology diffusion and logistic technology diffusion, to judge whether the regional TFP growth is in convergence or divergence state. In particular, based on the estimation results, this paper gives a certain threshold level of human capital.Empirical results show that:Firstly, average human capital and idiosyncratic human capital is an important factor to promote the TFP growth of Chinese provinces. The average human capital has a positive role in promoting TFP growth. It point out, the average human capital has a significant effect on technology progress, efficiency change and TFP growth by fix-effects model and quantile regression. The mechanism of impacts of average human capital on TFP growth is through united approach with other factors. Idiosyncratic human capital has played a significant role to promote technological progress. By utilizing quantile regression, because the positive effect of idiosyncratic human capital is significant at the top and bottom of the conditional distribution respectively, so we can conclude that the positive effect of idiosyncratic human capital is stable.Secondly, the effect on technology progress, efficiency change and TFP growth between idiosyncratic human capital and coessential human capital is significant different. Coessential human capital is a limited role to promote technological progress and TFP growth, but it has a certain impact on efficiency change. In theory, the human capital structure can indirectly affect TFP growth through directly affecting human capital accumulation, social investment environment, investment rates and other factors. But human capital structure is not a significant variable in the empirical results.Thirdly, This paper derive an empirical specification that nests exponential technology diffusion and logistic technology diffusion in a model where TFP growth depends on initial backwardness relative to the stock of potential world knowledge, proxies in the model as the TFP level of the leader country. This paper then test this specification for a cross-section of TFP growth of 30 provinces from 1991-2008. As the empirical results favor a logistic form of technology diffusion, some provinces may indeed experience divergence in TFP growth. To investigate this results, this paper derive a point estimate from the estimation results for the minimum human capital level necessary to exhibit catch-up in TFP relative to the leader country. The result points out 4 of these 30 provinces did indeed fall farther behind the leader province; which is Shanghai.