Total Factor Productivity Growth And Human Capital Effect

Since the reforms and opening-up policies began in the late 1970s, China has experienced miraculously rapid economic growth, which attracting extensive attention and research interests from many scholars. As a main tool for dowsing the growth source and evaluating the quality of economic growth, total factor productivity (TFP) is natural to become the focus of in-depth discussion, resulting in a large number of representative literatures. Undoubtedly, these literatures have provided important inspiration and reference value for us to further study. However, this dissertation does not just limit to the point of estimating and segmenting TFP growth in China, but focus more on the relationship between human capital and TFP growth. Theoretically, as the carrier of knowledge and technology, human capital is the most important factor of TFP growth, it exerts effects on TFP growth mainly through two channels:following Romer (1990), human capital may directly influence productivity by determining the capacity of nations to innovate new technologies suited to domestic production. Furthermore, adapting Nelson and Phelps (1966) model, human capital levels would affect the speed of technological catch-up and diffusion. Then in the real economic world, what difference would make between human capital and TFP growth? And what characteristics of human capital effect show on productivity growth? Obviously, replying to the questions would help to profoundly understand the effects of human capital on productivity growth.This dissertation has seven chapters. Chapter 1 brings forward the research questions and Chapter 2 reviews the theoretical and empirically literatures. Chapter 3 employs two different methods of DEA and SFA to estimate and segment provincial growth of TFP in China. Chapter 4 to 6 empirically analyzes the effects of human capital on TFP growth from different perspectives. Conclusive remarks and discussions are presented in chapter 7. Overall conclusions are as follows:Firstly, this dissertation estimates and segments provincial growth of TFP, and the results show that TFP in China is increasing and the main source comes from technology progress. The variations of TFP growth in different regions are consistent with each other, while the eastern region shows the fastest-growing in TFP, the western region is the slowest-growing, and the difference between them is significant and almost constant during recent years.Secondly, based on the Benhabib-Spiegel model, this dissertation investigates the effects of human capital and human capital heterogeneity on the provincial productivity growth in China (1990-2007). The results show that, country as a whole, human capital has significantly positive impacts on productivity growth and technological progress; primary education, secondary education and higher education exert different effects on TFP growth; while on eastern, central and western regions, the effects of human capital show distinctly different characters. In addition, this dissertation finds that the relationship between human capital inequality and TFP growth shown as significantly negative in the long run.Thirdly, based on the spatial Benhabib-Spiegel model, this dissertation empirically investigates spatial spillover effects of human capital under the prevailing of regional economic interdependence. The results show that human capital exerts significantly positive spillover effects on TFP growth and technological progress, while negative spillover effects on efficiency improvement. When inspecting different levels of education, we find that secondary education has significantly positive spatial spillover effects on TFP growth and technological progress, while higher education showing negative effects.Finally, the effects from human capital in a given region are closely related to specifical economic environment, such as economic development, openness of economy, physical capital, infrastructure, and urbanization be sure to go up to play important role on the human capital growth effects, and show threshold characteristics to some extent. From the results of view, those whose economic variable goes beyond a certain threshold value, the effects of human capital on productivity growth will show stronger, and these provinces mainly come from eastern regions, while central and western regions show poor performance.On the basis of the conclusion above, this dissertation puts forward some corresponding policy suggestions, including strengthening human capital accumulation, optimizing human capital distribution, making full use of human capital spatial spillovers between regions, emphasizing the complementary match between human capital and other economic variables, and promoting the formation of human capital market in China.