Alternative Personal Investment In Human Capital Effect

This dissertation aims at analyzing the competitive equilibrium characters of investment in human capital in China, which focuses on three problems: Is the investment in human capital excessive or insufficient? How to judge it? Which is the proper degree of governmental interference in the investment? What kind of policies should the government adopt? To solve the above problems, the article expects to explain two theoretical issues: reconsidering die effects of human capital and characterizing the competitive equilibrium of the investment in human capital. In contract to the previous human capital theories, two crucial assumptions are offered in the dissertation: we expect to consider the optimal degree of the government's interference in private investment in human capital which is assumed to provide enormous financial subsidies to private investment in human capital, while previous theories which are based on the presumption of no-intervening market, attempt to explain whether the government should interfere in itOur theoretical analysis embark on specifing the labor market, which factually functions as the social medium in human capital, while previous theories fail to analyze labor markets and thus, fail to consider the demand constraints of human capital. As a result, this dissertation presents a specified human capital hypothesis in which not only the theoretical cores of previous theories are considered, but also the market constraints are endogenously consideredThis dissertation is developed in the following path: firstly presentation of basic presumptions, then positive study, and lastly empirical study. The two crucial assumptions in the paper are "position rationing" in the labor markets and "substitution effect" of human capital. Based on these assumptions, the article concluded that the competitive equilibrium of private investment in human capital is no-pareto optimum, because serious demand constraints of human capital market in developing countries may bring about the effects of "Creative substitution" and "Adverse selection" among human capitals, which all contribute a negative externality to another.This dissertation is organized as follows. Chapter 1 gives a general introductioa Chapter 2 offers a critical review of previous theories and methods on investment in human capital. Chapter 3 presents the basic problems the paper focuses on. Chapter 4 presents the first assumption of the paper梡osition rationing in labor market Chapter 5 presents the second assumption ?substitution effect of human capital, which includes the effect of "Creative substitution" and "Adverse selection". Chapter 6 gives a positive study on the relationship between human capital investment and long-run growth, which expects to judge thecompetitive equilibrium characters of the investment in human capital from the perspective of pareto optimum. Chapter 7 presents empirical studies on the investment in human capital. Chapter 8 is conclusions and policy implications.The theoretical innovations of the dissertation are as follows:Firstly, the paper has constructed the micro-foundation of the mechanism on private investment in human capital, by presentation of the three basic assumptions, which are consistent with some economic facts of developing countries.Secondly, the paper has considered comprehensively the externalities of the private investment in human capital. Moreover, by presenting two models of dynamic optimum, the author has analyzed the social welfare judgments on private investments in human capital.Lastly, the general features of the models presented in the paper may be helpful to social welfare judgments of other competitive equilibriums.