Research On The Direct Measurement Of China's Human Capital And Its Implications

The direct measurement of human capital is a focused area of frontier research in the field of labor economics,and a difficult one.Thanks to the lack of survey data on the skills of China workers,currently,there are few research literatures on the direct measurement of China’s human capital,and none of them attempts to compare the return to skills of workers between China and other countries.This thesis utilizes the primary data obtained in the Survey of Adult Competencies in Henan Province conducted by the Institute of Population and Labor economics of CASS in 2016 to perform an empirical study of adult’s return to skills in China.This survey is conducted with the same questionnaire design and investigation mode as in PIAAC,and is the first and only internationally comparable adult competence survey project in China,thus has ground breaking significance when it comes to the direct measurement of China’s human capital.This thesis innovatively applies research methods from foreign literatures,to perform an empirical study of adult’s return to skills in China,then conducts a comparative study of adult’s return to skills between China and other countries,to determine the international position of China’s human capital quality in the world,and propose further policy suggestions on how to improve the quality of Chins’ s human capital based on the findings from the research.In a word,this thesis fills the gap in the specific research field of the direct measurement of human capital in China.Based on data from both the Survey of Adult Competencies in Henan Province and the survey of China Family Panel Studies in 2016,using research skills such as OLS regressions,Probit regressions,instrumental variable methods and quantile regressions,this thesis conducts an assessment of adult’s skills level in China,studies the heterogeneity in skills between different sub groups,compares the adult skills between China and OECD countries,and estimates the impact of education on skills,the return to schooling as well as the return to skills,the main findings are as follows.First,the skills of China’s labor force needs to be improved,especially the skills of literacy and numeracy.Secondly,education plays an important role in the improvement of individual’s cognitive ability and non-cognitive ability.More specificly,the marginal effect of education on the improvement of cognitive ability is generally higher than that of non-cognitive ability,and the marginal effect of education on the improvement of numeracy ability is the highest among all,followed by mandarin proficiency,both are higher than literacy.Thirdly,the years of schooling is significantly proportional to an individual’s ability.With the improvement of ability,the marginal effect of education on ability increases at first and then decreases.Fourthly,the economic return of investing in the vocational high school education is higher than that of ordinary high school and junior college.Fifth,both cognitive ability and non-cognitive ability have a significant positive impact on income,including numeracy,literacy,mandarin proficiency,and the level of intelligence.Sixth,at the upper middle income level,the marginal effect of ability on the improvement of income is the highest among all income levels.Seventh,education has a depreciation effect,that is,the human capital acquired by individual is devalued over time.Eighth,China’s labour market is not a very efficient one.Ninth,there is a certain level of gender discrimination and household registration discrimination in China’s labor market.Based on the conclusions mentioned above,this thesis proposes the following suggestions.First,the government should advance the development of middle level education,especially the development of vocational high school.Second,the basic education should be transformed from "exam-oriented" to "quality-oriented".Third,the higher education should be adjusted from "professional education" to "general education".Four,the development of on-the-job training,distance learning and continuing education should be promoted to make our society where every citizen is committed to learning and pursues lifelong learning.Five,a Survey of Adult Competencies should be conducted nation-wide on a regular basis,so that we can dynamicly monitor the quality of human capital in China.Six,laws and regulations of labor should be improved against gender discrimination and discrimination on household registration grounds in labor market,and the process of household registration system reform should be accelerated to annihilate discrimination on household registration grounds in China’s labor market.