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Study On The Impact Of Financial Repression On The Misallocation Of Highly Educated Labor Force

Posted on:2020-07-19Degree:DoctorType:Dissertation
Country:ChinaCandidate:J GeFull Text:PDF
GTID:1367330590456867Subject:Finance
Abstract/Summary:PDF Full Text Request
Jones and Romer(2010)found by constructing the "new kaldor fact" that the rapid expansion of the number of years of education of the labor force in recent decades did not bring about a systematic decline in the corresponding wage level,mainly because the promotion effect of human capital on TFP offset the effect of diminishing marginal returns of factors.The research of Jones and Romer(2010)provides a good explanation for how a country(region)achieves sustained economic growth and a formal basis for the new growth theory.The new growth theory emphasizes the decisive role of human capital accumulation in promoting TFP improvement in breaking through the deceleration of growth,but this theory ignores the possible human capital al ocation problem under the system distortion,so the explanation of "typical facts" of the economy of developing countries is insufficient.Since the enrollment expansion of colleges and universities in 1999,the average number of years of education of the labor force has been rapidly expanded,and the benefit rate of education has been relatively stable,but TFP has been at a low level for a long time.At the same time,due to the political consideration of some historical issues,such as the preferentia l development strategy of heavy industry in the early 1950 s,China's financial system has a serious institutional distortion--financial repression.This is a serious hindrance for China to break through the deceleration of growth and achieve high-quality development.In view of this,this paper,starting from the new economic growth theory,aims to solve two key problems :(1)the internal mechanism of the expansion of the highly educated labor force and the relative ly stable rate of return on education;(2)the institutional roots of the expansion of the highly educated labor force and the promotion of TFP are lost.This paper first analyzes the bias of China's technological progress and the micro-ma in body under the public economy--the human capital price formation mechanism of state-owned enterprises,in order to answer the first question of this paper.Secondly,this paper constructs a research framework of the impact of financial restraints on the misallocation of highly educated labor force through a manufacturer's production decision model of the industrial sector,and puts forward a research proposition.Finally,the corresponding empirical analysis is made.Research findings:First,the two key issues that this paper aims to address are inherently consistent.The expansion of the average years of education and the relative stability of the rate of return on education in China are actual y a phenomenon of misallocation of highly educated labor force.The relative stability of the rate of return on education is maintained by the institutio na l distortion of the financial system--the "interest rate rent" brought by financial repression to state-owned enterprises,at the cost of increasing the leverage ratio,the possibility of systemic risks and other future economic burdens.On the one hand,the misallocation of highly educated labor force among ownership,industries,professions and educational resources(the misallocation of educational expectation of highly educated labor force)caused by financ ia l repression cuts off the connection between highly educated labor force and innovative work.On the other hand,it reduces the technical suitability of the highly educated labor force and makes it not competent for innovative work,thus resulting in TFP loss.Second,financial repression has led to a misallocation of highly educated Labour under ownership.State-owned enterprise managers for access to credit resources tend to pay a large amount of management fees(such as on-the-job consumption,lobbying with the governme nt behavior)and thus to the enterprise innovation efficiency,and financial repression in price distortion caused by highly educated labor force,has made innovation power lower state-owned enterprise configuration too many highly educated workforce.The empirical results show that in non-administrative monopoly industries,financial repression has a greater impact on the mismatch between ownership systems caused by scale relative price distortion,while in administrative monopoly industries,it has a greater impact on the mismatch caused by technology relative price distortion.Third,financial repression has led to a misallocation of highly educated Labour across industries.As a result of the financial repression,the profit space and factor return rate of the real sector are continuously narrowed,which aggravates the phenomenon that the financ ia l capital and the highly educated labor force "shift from virtual to real",and leads to the mismatc h of the highly educated labor force in the industry.The regression results show that :(1)the scale of the tertiary industry in China,especially the service industry with low knowledge density,is generally too large;(2)financial inhibition has a significant inhibitory effect on the margina l output of highly educated labor force through the scale of the tertiary industry,which proves that financial inhibition is the cause of the mismatch between industries of highly educated labor force.Fourth,financial repression has led to a mismatch between the jobs of highly educated workers.By constructing a model of individual career choice in monopolistic competit ive environment,it is found that when financial repression is combined with monopoly,highly educated talents have lower entrepreneurial intention.Empirical evidence further shows that :(1)in natural monopoly industries and administrative monopoly industries,financial inhibition has a smal er gap in inhibiting the entrepreneurial intention of highly educated talents;(2)the expected profit and loss of entrepreneurship caused by financial repression is greater than the impact of the opportunity cost of giving up the wel-paid jobs in state-owned monopoly enterprises on the entrepreneurial intention of highly educated talents.In addition,financ ia l repression reduces the expected return of entrepreneurship of highly educated talents,further enhances the attraction of monopoly enterprises to human capital,and further reduces the agglomeration effect of human capital of small and medium-sized enterprises,leading entrepreneurs to fall into a vicious circle of reduced expected return and decreased willingness to start businesses.It can be seen that financial repression is the fundamental reason for the low wil ingness of China's highly educated talents to start businesses.Fifth,financial repression leads to the misallocation of educational resources.In China's economic development model that combines administrative centralization and economic decentralization,the central(or superior)government adopts the promotion system through the assessment of economic indicators to local governments,which strengthens the intervent io n power of local governments in the al ocation of factor resources.Financial repression is a manifestation of the expansion of local governments in China.In this context,the highly educated labor force tends to seek rent through the power of administrative positions rather than engage in productive and innovative interactions.Empirical results show that :(1)state-owned administrative personnel have higher educational expectations;(2)financial repression has significantly increased the expectation of members of private enterprises and administrat i ve talents in state-owned sectors to receive college education and above,resulting in the mismatc h of educational resources in China;(3)financial repression mainly increases the educationa l expectation of administrative talents by increasing the relative level of available rents.This study will help expand the academia to study of the theory of the human capital accumulation and al ocation issues related to the depth,and for the system in our country to perfect the financial system,optimize the distribution of the workforce and promote TFP,break through the growth to slow down under the new circumstances,provide a reference basis to realize high quality development,the possible innovation place has the following three points:(1)expand the research framework of the new growth theory.The new growth theory emphasizes the important role of human capital accumulation in economic growth,and explains the "new caddo fact" from the perspective of increasing marginal returns.From the perspective of human capital mismatch,this paper gives a possible new explanation to the "new caddo fact",which is an extension and supplement to the research framework of the new growth theory.(2)it provides a new perspective for examining the adverse impact of financial repression on macro economy.Previous studies have focused on the effects of financial repression on the misallocation of physical capital.This study starts from several practical issues such as ownership choice,industry choice,career choice and educational resource al ocation of highly educated labor force,and deeply studies the impact of financial repression on the mismatch of highly educated labor force.(3)made marginal contribution to the exploration of the causes of "lost" of China's innovation.Previous studies mainly studied the "lost" problem of innovation in China from the close relationship between human resources and innovation work,but few literatures focused on the structure of human capital itself,that is,whether human capital is competent for innovation work.This paper examines the different effects of financial repression on the educational expectations of technical and administrative talents,and finds that the excessive power of local governments in economic intervention represented by financial repression policy is exerting profound influence on the human capital structure of society.
Keywords/Search Tags:Financial Repression, Factor Mismatch, Highly Educated Labor Force, Total Factor Productivity
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