Research On Farmer's Human Capital Investment And Non-agricultrural Income

Using econometrics and modern decision-making methods, this paper combined combined farmer's human capital investment with modern economics and management, the ways, motives and decision-making mechanism of farmer's human capital investment was analyzed. The cause-effect relationship between farmer's human capital investment and non-agricultural income was researched.The first part of this paper is the review on the developmental process, and the summarization on the latest achievement of human capital theories. Since its inception, human capital theory has been classified as human capital investment on economic growth and human capital investment on income distribution. Human capital theory in China is basically developed along these two clues, and the most achieves on income distribution of human capital investment is mainly concerned the relationship of human capital investment and the farmer's distribution of income, which is the important content of human capital theory. Borrowing the human capital models of Becker et a l, This paper systematically analyzed the imputation mechanism between human capital and income distribution.The second part of this paper is the research on the decision-making of farmer's human capital investment. Using nonlinear constrained optimization method, borrowing the concept of family capital, this paper built a decision-making model on offspring education investment of rural households, analyzed the impact of family capital and the risk of non-agricultral employment on education decision-making of rural households. The result shows that only at existence of the risk of non-agricultural employment, economic capital has positive marginal effect on decision-making of offspring education investment, namely, the more economic capital the family owned, the more education investment on their offspring; if there was not the risk of non-agricultural employment, the marginal effect of economic capital was at zero. The family human capital has a positive marginal impact on decision-making of education investment regardless of whether there is investment risk existing. Namely, the higher level of human capital parents own, the more education investment on their offspring.The third part of this paper is the empirical study on the relation between farmer's human capital investment and non-agricultural income.Firstly, based on the absolute income hypothesis, regression model of human capital invest was established. Using panel data of rural regions of China, the average level of human capital investment of Chinese farmers was estimated. In accordance with the region division of eastern, central and western, farmer's human capital investment in all regions was compared with the international comparative data, and differences in China farmer's human capital investment was summed up. The result showed that the proportion of investment cultural entertainment and health care investment of Chinese farmers were much higher than that of other countries in the corresponding stage of development; however, only in the western region, the proportion of transportation and communication investment was much higher than international level, while the central region the was nearly to international lever, and the western region was lower.Secondly, based on macroeconomic time-series data, comprehensively using econometric methods, this paper systematically analyzed the long term equilibrium relation between farmer's human capital investment and non-agricultural income. The results showed that: there was a long term equilibrium relationship between farmer's human capital investments and non-agricultural income. entertainment&education, and transportation&communication investment all were the Granger casualty of the growth of non-agricultural income, however, health care was not Granger r casualty of the growth of non-agricultural income. And non-agricultural income was the Granger casualty of entertainment&education investment. In addition, there was a two-way Granger casualty between entertainment & education investment and transportation & communication investment, and transportation&communication investment was the Granger casualty of entertainment&education investment and health care investment separately.Finally, Using of inter-provincial panel data, Regression estimation model has been established, and a comparison analysis has been conducted. The result showed that in the context of urbanization, the ratio of urbanization, cultural and educational entertainment investment, health care invest and transportation&communication investment had all positive effect on the growth of non-agricultural income , however, there was larger differences among eastern, central and western regions.Entertainment&education elasticity of non-agricultural income was respectively 0.19, 0.58 and 0.46 in eastern, central and western regions. This shows that the rural economics was higher developed, and the starting point of non-agricultural income was higher in eastern rural regions than that in central and western rural regions. The promotional effect of the entertainment&education on the growth of non-agricultural income was lower in eastern rural regions than that in other regions. Health&care elasticity of non-agricultural income was 0.34, 0.44 and 0.39 in eastern, central and western regions respectively. This shows that the promotional effect of transportation &communication investment on the growth of non-agricultural income was very distinguished. transportation&communication elasticity of non-agricultural income was 0.22, 0.08 and 0.08 in eastern, central and western regions respectively. This shows that the infrastructure of transportation&communication was well in eastern regions that that in other regions, and transportation&communication investment of rural households has a significant effect on the growth of non-agricultural income in eastern regions.Combined theoretical analysis with empirical research, this paper studied the relationship between farmer's human capital investment and non-agricultrural income. Some useful Conclusions have been obtained, and the targeted suggestions has been put foreward. It has important theoretical value and practical significance to enhance the quality of the rural labor force, to promote non-agricultural employment, and raise the non-agricultural income of rural residents.