Investment In Human Capital, Research, And The Income Gap

The past 30 years, China's investment in human capital with a substantial increase in rapid economic growth, while also expanding income gap. Thus, China's investment in human capital does not narrow the income gap, then, whether human capital investment and the income gap are kept between certain of the relationship? This article based on the human capital earnings function within the subject of human capital investment perspective. Following major elements.:First, Family Human Capital Investment on Income Gap.Investment in human capital earnings function based on the introduction of minimum consumption, in the generational model, the analysis of household human capital investment on the income gap. Analysis showed that:the budget constraints and capital market conditions do not exist, the initial gap in income between human capital, while the income gap between investment in human capital caused by the family, the family of human capital investment gap has led to the income gap. So the cycle continues, the "Matthew Effect" formation of the poor get poorer and the rich get richer, and widening income gap. Budget constraints and imperfect capital markets conditions, the influence on human capital investment by human capital investment is uncertain, cause the low-income families can receive investment in human capital through the capital funds needed, but leaving to pay a higher interest rate financing. When the human capital investment income greater than the lending rate, the family investment in human capital can reduce the income gap, When the human capital investment income less than the loan rate, the family of human capital investment will widen income gap. Therefore, it is difficult to reduce the income gap, if the human capital investment only by a family.Second, Enterprise Human Capital Investment on Income Gap.In general, the enterprise human capital investment is unequal.this inequality mainly for, Employees are invested by different enterprises, and different employees are invested by the same enterprise. This article analyzes the latter one. because of the inequality, it effects the formation, compensation, enhancement of this capital, and then make the difference, Simultaneously, the capital effects the productivity and ability of employees, then is the career development and performance pay, and ultimately the income gap is formed.the enterprise human capital investment can not only can compensate for the depreciation of human capital part of the decline, but also can improve knowledge and skills of staff. So the level of employees who accepted the investment is higher than the others, thereby they have higher productivity and affect their development. Regardless of the performance by labor productivity, or the income gap by the career development, will all cause the income gap of employees. Therefore, enterprise human capital investment, does not reduce the income gap, but expand it.Third, State Human Capital Investment on Income Gap.Formerly, this investment effects the income gap, Equalization is the precondition for many countries, and the conclusion is the state human capital investment will contribute to reduce the income gap. But in fact, the investment have 4 unequal cases, they are:insufficient investment, but equal;insufficient investment and not equal;full and equal investment; enough investment but not equal. An equal state human capital investment will contribute to reduce the income gap, and the effect with a platitudinous investment should be more prominent than an insufficient one. However, the effect of unequal state human capital investment for the income gap is uncertain, when the state investment tend to low-income families, it will reduce the income gap effectively, when the investment tend to the high-income families,it not only reduce the income gap, but expand, worsen the income disparity, even form the polarization. Therefore, the effect of state investment in human capital for the income gap is uncertain, and the key is the policy of it.This article also do the empirical research on the income gap impact of human capital investment between rural and urban households separately It show the relationship of the family human capital investment and its income gap is a positive correlation,and a disparity on human capital investment will widen the income gap. In our country, the investment favor of unequal and high-income family, it not only reduces the gap, but also widen it.In the theoretical analysis and empirical research, based on human capital investment about the family, business and state, we propose a policy and suggestion that to reduce the gap of human capital investment, to promote equality opportunity, and especially, make the human capital investment to be a real effective tool for reduce the income gap.