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Study On China’s Public Financial Investment In Education From The Perspective Of Rate Of Education Social Benefits

Posted on:2015-12-19Degree:DoctorType:Dissertation
Country:ChinaCandidate:G Y LiuFull Text:PDF
GTID:1109330467482918Subject:Public Finance
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In the21st century, as the era of knowledge, the competition of knowledge and technology has become the most important part between countries, which mostly depends on factor of human capital. Since the mid-20th century, many economists point out that human capital plays an important role in increasing personal income, promoting economic development and social progress. with the development of Chinese economy and the structure of factor endowments optimizing, the ability of innovation and absorption is enhanced, in the process of globalization, China will confront more intense competitions. in order to take advantage in the competition, we need to utilize our human resources fully, transforming it into competitive human capital.As the most important form of human capital development, dissemination of knowledge and technological inventions, education has become an important source of inspiration and support to the promotion of economic growth and development. But education is a quasi-public goods:on the one hand, education can bring huge private benefits to meet the higher level needs of educated people. On the other hand, education also can bring positive externalities, which demonstrates the properties of public goods. Namely, while the educated people obtain the private profits, there is a large part of it scattered to the whole society, improving the labor productivity. As the existence of externalities, is will lead to the inadequate between the education supply and demand, which becomes the reason that government involves to work out the policy of educational finance, in the form of adding the actual education investment, considering the reality of our country. For the importance of educational resources allocating, this has become a new focus of governments and academia, also becoming the topic of this article.As the above indicated, this paper is carried out based on two considerations:firstly, many studies have shown that education affects economic growth as one of the endogenous variables, playing a great role in improving the economic performance. Taking the education as an industrial sector, it can bring a variety of externalities, which can presently improve the quality of labors. Meanwhile, it also can refine the social and cultural^environment for the economy. Secondly, although numerous studies have pointed out that the development of education impetus sustainable economic growth, still some governments occasionally cut the education budget, which needs an theoretical argument, In order to get a empirical support, this paper is based on the Uzawa-Lucas two-sector Model, directly modeling and estimating the education externality, with the view to provide policy recommendations for formulating our educational finance policies, so the main contents are as following:1. Reviewing the human capital and education benefits theories. Considering from different dimensions and aspects to explore the education social benefits and educational finance policies, these studies mainly focus on the mechanisms that education impacting the economic growth, the qualitative and quantitative researches upon the education social benefits, including the calculating methods and movement trends, also on the impacts that educational finance policies bring. But these theories are usually confined to a particular area of research, which is contradicted with the trend that researches concentrating on the education benefits have been forward to multi-disciplinary and become involved in politics, pedagogy and other disciplines, besides economics. To introduce a wider perspective of research, this paper is conducted from multi-dimension levels of public finance> economics and pedagogy.2.In order to provide theoretical support for the empirical analysis and policy recommendations following, we need to further explore educational input and benefits, which includes the educational input and education pubilic finance, the categories and calculating methods of education, all of these can connect the above and the contents as followed.3.As followed, this paper analyzed the current situation of China’s educational finance, divided into several dimensions on the achievements, problems, etc. The analysis points out that firstly, the existence of lack of total quantity and lower ratio of GDP, which not only affects the level of education development, also confines the release of externality of education in the future. Secondly, the structure of investment is irrational, in the terms of unbalanced allocation ratio of education funding and unequal distribution to different levels of education and regions. This will be not conducive to the realization of equal education opportunities. All of these induce the lower social benefits of educaton, which indicates the inefficiency of education public finance. At last, the financial resources and responsibility to all levels of governments do not match, resulting in an excessive burden on local governments, doing harm tot the stability of local input. This chapter uses a lot of statistical data and is fitted with the related theories, doing a double meaning in theory and practice.4.For getting a more effective measure to illustrate and quantitative estimate the social benefits of education, this paper firstly processes the two-sector model, based on the theories above, proving this model is viable and effective. Here are three hypothesis needed to show first:1) The output functions of two sectors are introduced with the capital and labors assigned. Due to the level of production of non-education sector is dependent on the education sector, so its output is also involving the education sector’s volume produced.2) According to the human capital theory and the neoclassical theory of economic growth, there exists different marginal factor productivity between the two sectors.3)Input and output of the education sector are with the same period, no lagged responses. Namely, its output can be absorbed, spread and applied quickly with negligible delay.Next, this paper processes the data on GDP, fixed assets investment, employed population, educational investment firstly, then calculating variables of Y/Y,I/Y,L/L,(X/X)(X/Y),(X/X-X/X·X/Y). For getting information about the stationarity or not, this paper conducts the unit root and cointegration tests. All results reject the Ho hypothesis, that the variables are stationary with order one. Meanwhile, the tests indicates the dependent and independent variables are cointegrated, with a long-run equilibrium relationship. So, as long as we estimate a, the coefficient of (X/X-X/X·X/Y) it is approximate equal the externality of education, namely the rate of education social benefits.In the view of that the panel data this article uses has a greater dimension of section than that of time, which might induce the heteroscedasticity and serial autocorrelation problems, the empirical process chooses the PCSE method, which can correct the heterocedasticity and serial autocorrelation automatically, improving the significance of the results. Using the national data, the PCSE regression gives the estimated value of0.213, and the T statistic is significant, indicating a high externality. Considering the characteristics of China’s regional economic development, this paper regresses the eastern, central and western separately. Although the coefficients are different in the three regions, they are all significant. Among them, in the central region, the externality reaches a maximum of0.320, a lowest of0.144in the eastern, followed by0.225secondly in the western. The explanation for this is that we can take the education as "a product", then the investment in it is affected by the law of diminishing marginal benefits. In this regression, the marginal productivity difference between the education sector and non-education sector is less than0, as the education sector holds the unproductive character.To validate the robustness of the evidence, this paper gives the results of quantile regression at the quantile of0.1,0.2,0.4,0.6,0.8and0.9. The results are basically consistent with previous conclusions, and more intuitively show that the externality of education declines after getting the maximum at the0.8quantile.This chapter is the core of this article. As the education can bring tremendous externality, promoting the economic development and social progress, we need to increase the investment in the development of education. Also for the sake of externality, the government should play the most important role in the investment, rather than individuals and other social associations.5.Given the current problems about the investment in education, the article concludes with a relevant policy recommendations. Firstly, ensure an adequate financial investment in education to ensure the priorities to education. In this process, it maters to determine a reasonable investment target and proportion of education investment according with the demand (average funding of per student and the goals for every level of education)in the future. To increase funding, broadening the education funding sources is important. With an adequate funding, it will need to strengthen management and improve efficiency in the use of financial investment in education. It also needs to optimize the regional and urban-rural structure of investment. All these policy recommendations are closely to the current status and problems mentioned in the previous chapter, with the support of relevant theory and data, providing a practical policy proposal for the improvement of China’s investment in education.This paper has an innovative research perspective to analyze the educational finance, based on the social benefits of education, making up for the previous numerous studies which ignores the relationship between the externality of education and government’s investment policies in education. Meanwhile, different from the research framework conducted on the human capital and education screening theory to illustrate the role of education to economic growth which western scholars often use, we start from the reality that China is a socialist market economy country, so the government can carry out more effective macro-control in allocation of educational resources. Through a optimal investment policy choice, it can guide the flow of educational resources and ultimately maximize the social benefits of education and distribution equilibrium. Based on this, this article is more in line with China’s national status and more feasible, starting from the externality of education and concluding with the education investment policy choices.
Keywords/Search Tags:Human Capital, education benefits, educational social benefits, educationpublic finance policies
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