A Study Of The Relation Between Human Capital And Regional Disparity Trend In China

Chinese economic growth has reached an extraordinary level since it launched the open and reform policy. At the same time, the regional gap of output per capita has been continuously growing wide. Decreasing regional growth disparity has become one of the main aims of the macroeconomic policy now in Chinese central government.Human capital, which is the most valuable resources, contains large knowledge and technology. Human capital improvement does have a significantly positive effect on the economic growth, and the difference in human capital is the major cause of regional economic disparity.The aim of this paper is to study the influence of human capital on regional disparity trend in China.The disparity trend is such situation that the stationary equilibrium of regional economic growth contain a polarization situation, and can be described as twin-peak or "two-club" convergence.Around this theme, the paper makes a retrospect on growth theory and human capital theory in economic thought, analyses the mechanism that human capital plays an important role on economic growth, measures the growth disparity over regions, and studies the influence of human capital on regional disparity by the use of econometric method in two types of convergence model.And also,the paper discusses the dynamic relationship among the change of TFP, openness and human capital stock.And therefore to provide certain policy suggestions on narrowing regional inequality and achieving the coordinated development of regional economies.Based on theory of economic growth and human capital, the dissertation aims at making a general analysis of the relation between human capital and the divergence in growth rates across regions both theoretically and empirically.First, the paper measures the phenomenon of economic disparity over regions by inequality index and income distribution method for 30 provinces in China during 1978-2008. Our findings are that firstly, China's provincial economic growth disparity has cyclical charactor. Secondly, through the decomposition of theil index, we find that the contribution of disparity belonged to between-regions is becoming larger and larger.Thirdly, provincial income distribution shows a twin-peak club convergence pattern.Second, in order to search the reason of the phenomenon, we study the factors that influence regional economic growth disparity by the use of econometric method in two types of convergence model. Firstly, we include the human capital and other variables during 1978-2008 in regression model in normal way. Our findings are that human capital has become an important factor to cause the economic disparity over regions. This relationship is especially significant in west region. Provincial economic growth shows a club convergence pattern. One of the most important reasons to cause this result is the regional disparity in human capital.Then, the paper measures the phenomenon of human capital inequality by the gini coefficient for 30 provinces in China during 1987-2008. By the use of augment Solow equation model, we study the relationship between Human capital inequality and regional economic growth disparity. Our findings are that Firstly, education expansion policy significantly improves education disparity among regions. Secondly, Human capital inequality blocks economic growth and it has become an important factor to cause the economic disparity over regions. This relationship is especially significant in inland provinces.third, the paper use FDI and trade openness to proxy openness, then we use Error Correction Model (ECM), VAR model and other methods to discuss the dynamic relationship among the change of TFP, openness and human capital stock. Our findings are that:Firstly, the effects brought by openness and human capital to the change of TFP are positive. Secondly, human capital has a stronger effect on openness. In general, it can be concluded that for the sake of technology progress and openness, we should pay more attention on education and human capital accumulation.Fourth, we analyze in detail the education investment in China at country and regional level. Our findings are that:Firstly, education input is insufficient in China as a whole. Secondly, the distribution of education recourses at different regions is not fair. Thirdly the distribution of education recourses at different levels is unreasonable. What's most important suggestion through the research is that the government should pay more attention on human capital accumulation. The education policy should also think about human capital inequality within regions.Regional disparity is one of the most difficult questions to realize modernization. But, it's alse an opportunity for China to continue high economic growth in the next few decades. Undeveloped regions have cheap labors and abundant natural recourses which are the driving forces for Chinese future development. The most important thing, in order to realize the dream, is to enhance human capital accumulation and to improve infrastructure development.