Impacts Of Human Capital On Economic Growth And Regional Disparity

With the arriving of the knowledge-based economy has enabled the human capital, the carrier of knowledge, to receive an unprecedented concern. In the trend of economy globalization, the great changes have taken place in the world, such as the transformation of the drive mechanism for economic growth, the shift of the strategic stress on competitions among countries and so on, which indicates that the human capital, as a ultimate resource in competition, holds tremendous economic values, and is bound to be the perpetual power for economic development in evry countries. China has huge population and bountiful labor resources, but the natural resource per person is lower comparatively. If the human resource can be transformed into human capital, and the advantage of resource into competition, then China will not only be able to weaken the economic development's dependence on natural resource, but to gain continual momentum from future competition.Since the reform and opening, China makes lasting and rapid economic growth, which gains a well - known achievement. However, with the high-speed economic growth, the rural economy is very slow, the gap between the urban and rural areas and regional disparity becomes larger and larger. Except of the system and the regional factors, one of the causes is the low stock of human capital in rural areas, and the larger inequality of it. As human capital comes from investment, which causes accumulation of human capital. Therefore, the thesis tries to analysis the unbalance of investment in human capital by the problems of human capital investment, That is the insufficient of investment of human capital which is induced by the unbalanced investment between material capital and the human capital, the deficient of investment of rural human capital brought by the investment policies of city-oriented human capital, and the regional disparities of human capital investment led by different levels of economic development. The unbalance of human capital investment ultimately causes the regional disparities of human capital inventory, and the further decline of the rural human capital. On the other hand, under the limited national investment and the investment policies of city-oriented human capital, the rural human capital flows out into cities or non-agricultural industries in developed areas with the non-agricultural population by impelling of economic interests and other factors. As the human capital with well educated possesses more non-agricultural advantages, non-agricultural population is essentially equivalent to that of rural human capital. The final result of rural population non-agriculturalization is that human capital is flow out and the human resource is left. As for the outflow of human capital, the higher level of human capital, the lower possibility of returning as countryside owing to the frailness of agriculture and the inherent wage disparity between urban and rural areas. That is that this flow way of the rural human capital, generally is a state of unidirectional loss or net loss, which leads to an existence of serious"misplaced effect"in rural human capital investment. Therefore, the loss of rural human capital brings a further decline on the general level of rural human capital, and meantime, according to the relationship between the flow directors of human capital related to level of regional economic development, which touches up regional disparity of human capital stock.In order to probe into the relationship between the regional disparity of human capital stock (one part is produced by non-equilibrious human capital investment before formed of human capital, another is generated by non-agricultralization of rural population after the formed of human capital) and regional income gap. This study introduces two kinds of different methods respectively, namely, a traditional method and a new method based on regression analysis to make spatial decomposition and factor decomposition on income disparity in rural China. The results of the spatial decomposition indicate that all index values (either Theil-L or other applied index based on regress analysis) are widening income gap in rural area. Moreover, the expanding speed among different regions is faster than that within region, and the contribution of income gaps of different regions to total regional disparity made is increasing constantly, but it is declining within region. The decomposition results of the determinant factors of regional income gap indicate that, although the contribution of geographical factor to income disparity has a dropping tendency, its impacts on income disparity cannot be ignored because of its absolute contribution and relative contribution. The contribution of capital to income gap is rising, so far, it has become the second factor contribution followed by geographical factor, and the contribution of industrialization ranks the third. The impacts of human capital to income disparity are equivalent to industrialization in the mid 1990's.Based of decomposition results of the determinant factors of regional income gap, the thesis sum up three key problems in the existent methodologies (including assuming income model to be the linear function, using marginal effect of human capital on income to explain its impacts on regional income gaps, and ignoring the characteristics of panel data), and then puts forwards a new analyzing frame, and further to calculates the contribution of human capital to income inequalities, and according to the empirical results analyze the incorrect of methodologies will cause large errors. The results present that, no matter how the absolute contribution and relative contribution, only that contributions of educational and geographical factors to income gaps are declining in all of decisive factors, moreover, the downward trend of educational is quicker than that of geographical. This means that some measures of government in human capital have played a important role on decline regional disparities, and if the governments continue to supply more supports in human capital, which will reduce regional disparities in a large extent. Combining it with the former analyzing results (that is, the contribution of income gaps among regions to total regional disparity is increasing ) can explain relationship between regional gaps and increasingly expanding regional disparity of human capital inventory.In order to analyze the role of human capital to the income growth of rural residents, the thesis uses regular Solow Residual (SR) method to decompose the income growth of rural residents into the contribution of input factors and the contribution of total factor productivity (TFP). The results indicate that, in terms of input factors, as for the growth rates, the growth of capital is the highest. Secondary in rank is the growth of industrialization, which accounts for only one third of capitals'. The growth of education is only 10% showing a trend of decline throughout the whole course of period. This result reflects a state of unbalance investment between the material capitals and human capitals. From the contribution of input factors, industrialization is the biggest contribution factor to income growth. The contribution of education is following industrialization and presents an ascend trend in later period. Capital, but instead, has become the third contribution followed by industrialization and education. Thus it can be seen that high input of capital did not bring forth high growth of income, but industrialization and education are the important contribution to rural residents' income growth. Comparing industrialization, the marginal contribution of human capital is far higher than that of industrialization. This predicts that human capital will be the biggest contribution factor to income growth of rural residents in the near future. In terms of Total Factor Productivity (TFP), in comparison with national average, the total factor productivity of rural area is much lower; compared with the contribution of input factors, the contribution of TFP to the income growth is also rather lower. In time trend, the contribution of TFP had little change in early stage, but it declined rapidly during the later period. In addition, the contributions of TFP to income of east region are higher than that in central and west regions. The lower of TFP in rural area,to a great extent, relates to the lower level of rural human capital stock. As human capital not only has productivity, but also disposition ability. The lower of TFP means lower allocation efficiency of agricultural productivity, and lower transfer and utilization efficiencies of agricultural scientific and technological achievements. The lower of the contribution of TFP to income growth shows that the income of rural China mainly relies on the growth of inputting factors, which is a typical input growth. On the other hand, it also indicates that the contribution of TFP to rural residents'income is largely growth space. Besides, a significant drop of TFP in the later to some extent is the result bought by a large amount non-agriculturalization of rural human capital. Comparing with the central and west regions, the higher TFP in the east regions reflects that there is a high degree of marketization in the east regions, and accumulated highly qualified human capitals, which lead to a high efficiency of resources allocation consequently.The empirical analysis conclusions that the contribution of human capital to regional inequalities is dropping, and the biggest marginal contribution rate and the second rank of contribution to income, to sone extent to explains the phenomenons that the non-agricultralization of human capital and regional income disparity are expanding contemporarily, and meanwhile, it also shows that the fundamental cause of slow of rural economy growth due to the low level stock and serious loss of rural human capital. The problem of low of rural human capital stock can be solved by the adjustment of national investment policies, but the further loss of human capital caused by the non-agricultralization of rural population is a dilemma problem. Because the non-agricultralization is an inevitable trend of China's economic development, but there must be a high level of human capital can achieve it, and same as to rural development, which formed a dilemma of human capital in the development of agriculture and non-agricultralization. In this play game, the minimum level of human capital for the development of rural economy cannot be guaranteed owning to the weakness of agriculture and inherent income gaps between rural and urban areas. A dropping contribution of human capital to regional disparity means a mount of rural human capital further loss will worsening of region disparities. And the greatest marginal contribution rate of human capital means that there will be a perpetual existence of disparity if human capital of agriculture and non-agriculture cannot be in equilibrium.In order to solve the problems, the thesis puts forward two proposals. One is the outflow scale of rural human capital is likely to develop along with an inverted U-shape trace used by Simon Kuznets to describe the relationship between economic growth and regional disparities. That is to say, regional inequality goes through a process of enlarged at first and then narrowed, which depends on market force. Moreover it will take a far-flung period from one side of inverted U-shaped trace to other side, which is unfavorable to solve problems in current economic development. The other is to seek for a point of balance on the demand of human capital between rural development and non-agricultural development, which due to governments'power and government needs to take hold of the degree of issues in the process of the investment before the formation of human capital and non-agriculturalization after that. Moreover, this process takes a short period and has an obvious political effect comparatively, which is very favorable to deal with the practical problems in present economic development. Based on the later, the thesis puts forward the politic suggestions that constructing the protecting system of human resources development and human capital shift and so on.