Research On The Relationship Between Heterogeneous Human Capital And Economic Growth

The study of economics has been one of the hottest topics Since Adam Smith. Through the debate lasting for two hundred years, economists generally believed that the factors drove economic growth were mainly the accumulation of productive resources, the increase in efficiency of resource use and the progress of technology. Scholars of human capital theory represented by Schultz’s abandoned the assumption of capital homogeneity since 1950s-1960s; they proposed the important variables of human capital were ignored in the past. The scholars introduced human capital as one important exogenous variable to explain the economic growth, which based on Cobb-Douglas production function that treated labor inputs and material capital inputs as independent variables. The New Economic Growth Theory raised by representative figures of Roemer and Lucas in 1980s. They then introduced knowledge and human capital as endogenous variables into economic growth model, emphasized these two variables were the main determinative factors for long-term economic growth. Since then, amounts of researches proved the contribution of human capital on economic growth from theoretical and empirical perspectives. However, through studied past researched we found that human capital made contribution to economic growth differ from economies size, even differ from periods for the same economy. Existing researches trended to explain this issue from aspects such as human capital stock and average level of human capital. The basic view was that the differences in stock of human capital or average level of human capital leaded to the different contribution. However, through analyzed statistical data and made comparison, we found that for one region with higher level of individual human capital, the economic growth rate was lower than another one with a relatively lower level, taken Shanxi and Zhejiang for an example to make this comparison since the beginning of the reform and opening up. This paper proposes that there could be some hidden factors beyond the ones we mentioned above, and the factors could be more important for contributing to the final result. The heterogeneity human capital is likely to be one of the key factors to solve this problem.The research of this paper on heterogeneity human capital conformed to Schultz concept of heterogeneity human capital theory; it developed general analysis to existing human capital theory and may further broaden the perspective of human capital theory and introduce heterogeneity human capital in economic growth theory. This paper will be able to develop and improve the economic growth model, enhance the model’s ability to explain the real world. In this paper, on the basis of combing the related theories of human capital, through theoretical deduction and empirical comparison method, we think that there exists heterogeneity in human capital. To distinguish this we should return to the connotation of human capital, namely the differences among knowledge, skills, experience and ability of human capital; under an assumption that human capital with equal external environment and talent, then the education level is one appropriate indicator to distinguish the heterogeneity human capital. The difference was obvious in human capital that took different education levels, for instance in knowledge, skills, experience and ability; however, the difference was tiny in human capital that took same education level. According to different education levels which human capital received, this paper divided human capital into primary human capital, intermediate human capital and senior human capital. On the basis of clearly defined-the fundamental definition, this paper through empirical analysis to study the following questions and got the related conclusion and revelation:(1) Data collected from 31 provinces of china, according to statistical analysis, the results revealed different trajectories of various types of human capital in various provinces and cities; the results also revealed different trajectories of various types of human capital even in same provinces and cities. Longitudinal comparison were made and found that different types of human capital have completely different development paths:the amount of primary human capital decreased obviously; the average human capital were rising slowly; intermediate human capital showed differences in various provinces and cities (a significant decline in developed provinces and cities, and which was rising in backward provinces and cities); rapid increase happened in senior human capital. Next step, horizontal comparison were made, the results showed disparity in different types of human capital of 31 provinces and cities:human capital level of Beijing, Tianjin and Shanghai were significantly higher than that of other cities; Tibet, Yunnan, Guizhou, Gansu, Ningxia and other western places were strikingly at lower human capital level. At the same time, for various provinces and cities, through the bidirectional comparison of different types of human capital, there showed inconsistencies of different types of human capital in different places:taken Shaanxi and Zhejiang for examples, the levels of primary human capital, intermediate human capital and average human capital of Shaanxi were higher than that of Zhejiang, but the senior human capital of Zhejiang province was significantly higher than that of Shaanxi.Since inconsistency obviously exists in different types of human capital levels and development modes, the method in previous research for taking the average level of human capital as the single agent index was questionable. When we treated the average level as the best one to represent the overall change, it actually ignored that the factors of human capital may critical for economic growth.(2)General regression analysis and quantile regression were used for measuring contribution of human capital to economic growth. According to the validation results, obvious difference between different types of human capital contributed to economic growth and between different stages of economic development for the same type of human capital. From the perspective of the comparison of general regression analysis, senior human capital made the biggest contribution to economic growth, the average human capital was in the second place, intermediate human capital and primary human capital were in latter places; primary human capital even made negative value contribution. Combination with results of quantile regression, we found that under different positions of conditional distribution, different types and even the same type of human capital made different contributions. In general speaking, the more developed the economy, the bigger contribution senior human capital made. What is notable is that Intermediate human capital made the best performance in middle provinces. Our analysis also found that when average human capital played a role on economic growth there existed two "threshold":in less developed provinces, when average human capital crossed value of the first threshold, its promoting effect on economic growth was significant; however, due to the average human capital in more developed provinces has not yet reached "the second threshold", so its promoting effect on economic growth has not been confirmed.Compared with the average human capital, senior human capital contributed more to China’s economic growth. This showed that ignoring senior human capital and analyzing average human capital alone in previous studies was inappropriate. Besides, considering the interaction of senior human capital and average human capital, different types of human capital should be evolved in economic growth model.(3)Through VAR model and mechanism model, this paper analyzed the dynamic process to seek relationship between human capital and economic growth. By building VAR model and using co-integration analysis, Granger causality analysis, impulse response and variance decomposition technology, our experiment found that there is neither a long-term equilibrium relationship nor Granger causality relationship between human capital and economic growth. From the impulse response results it could be observed the impulse response of economic growth to the average human capital even in reverse action in the initial installments; there is a long-term equilibrium relationship between primary human capital and economic growth, but there is no Granger causality between them; from the point of marginal output elasticity and impulse response analysis, the primary human capital have small effect on economic growth and the effect is reverse; there exists a long-term equilibrium relationship between Intermediate human capital and economic growth, there also exists one-way Granger causality, the economic growth showed more apparent effect on intermediate human capital pulse response, but may have rapidly declining; there is no long-term equilibrium relationship between Senior human capital and economic growth, but there exists a two-way Granger causality, from the impulse response of senior human capital on economic growth, the positive influence lasts longer time.The result of mechanism model validation showed that the average human capital on economic growth mechanism of Lucas and Nielsen-Phelps mechanism were both verified. The economic growth was resulted from more technology imitation than technology innovation. Nelson-Phelps mechanism of Intermediate human capital was verified, both technical innovation and technical imitation effects obviously observed; three mechanisms of senior human capital were all verified; the mechanism action of primary human capital on economic growth has not been verified.Compared with the existing literature, the innovations of this paper are mainly manifested in following aspects:Firstly, this paper tried to define heterogeneity human capital in more scientific and conducive way for making macroscopic empirical analysis based on combining theoretical and empirical analysis. This paper also made statistical description and analyzed the heterogeneity human capital of China’s 31 provinces and cities.Secondly, to verify the relationship between heterogeneity human capital and economic growth, this paper built a complete analysis framework, which adopted general regression analysis and quantile regression method to run the final result, verified the different contribution made by heterogeneity human capital in general economic growth and in different development phases of economic growth. The paper used VAR model and mechanism model to analysis the dynamic changes of two factors in dynamic process. The internal consistency between each parts of research conclusion suggested the preciseness and rationality of the whole research framework.Thirdly, compared with existing literature, this paper brought some innovate conclusions:various type of human capital played various role in promoting economic growth, and performed differ in different economic development stages; In current economic development stage of China, intermediate human capital and senior human capital performed more outstanding than the average human capital.Although average human capital of some provinces and cities performed normally, due to the abundance of senior human capital, these places owned relatively higher economic growth rate than the ones with higher level of average human capital.