The Effects Of Government Education Inputs On Macro-economy And Residents Welfare

Education is the main driver of the development of social, economic and cultural,input in education continued to be increased, since the introduction of the strategy of"invigorating the country through science and education"."Twelve Five" plan proposed,Financial education expenditure must be accounted for4%of GDP in2012. As ourcountry is gradually entering the aging society, population dependency ratio begins to riseand the structural contradictions population is increasingly prominent. As education is themajor institution of exporting labor force, its development is related to the labor supply inthe whole community, which ultimately affects the economic development of our country.Under circumstances of educational inputs increasing and the population structurechanging, studying the effect of Government education input policy on macroeconomicwill become very practical significance. In this paper, the dynamic CGE model simulatesand analyzes the effects of different changes in labor supply on macroeconomic andresidents welfare, providing a reference value for the formulation of population policy,industrial policy, and education expenditure policy.In this paper, we draw up the2007Social Accounting Matrix (SAM table) on thebasis of the2007input-output table,42sectors aggregated into19sectors, and the laborforce is divided into three. Based on Thurlow’s (2004) dynamic model, turning differentgovernment education inputs policies into different labor supply, we simulate differentvariations of the low, middle and senior labor supply, in order to analyze its effects onsector outputs, macro-economy and social welfare.The main conclusions of this paper are:(1) In the current technical conditions, themore investment in secondary education that causes increasing amount of intermediatelabor supply improves sector’s output, and increases residents’ income and the level of welfare, especially increasing expenditure on rural education will play the role on povertyreduction.(2) The increasing proportion of government expenditure on higher educationwhich increases the amount of senior labor supply not only reduces sector’s output,inhibiting investment and consumption, but also reduces the level of residents’ welfare.(3)Reducing the proportion of higher education expenditure will stimulate consumption andexpand domestic demand. Combing simulation results and China’s actual situation, thispaper put forward policy recommendations from the perspective of population policy,industrial policy, and education expenditure.