Human Capital Accumulation And Welfare Effects Of Equalizing Public Services Between Urban And Rural Compulsory Education

Promoting the equalization of public services is an important part of China’s14th Five-Year Plan and one of the long-term goals in 2035.Also,equalizing public services is an inevitable requirement to promote the process of rural revitalization and common prosperity.In view of the actual background of the unequal accumulation of urban and rural human capital and the inequality of public services in urban and rural compulsory education in China,this paper takes the equalization of public services in urban and rural compulsory education as the main research object.Microdata shows that the educational attainment of China’s urban-Hukou holders continues to improve.For urban residents born after 1979,the proportion of people with a high school degree or above is more than one-fifth,but this proportion is only about 25% of rural residents.From the perspective of intergenerational mobility of education,the intergenerational mobility of urban residents is higher than that of rural residents,which means urban children are more likely to obtain higher education and human capital than that of their parents.The accumulation of urban and rural human capital is an important topic that affects economic growth and income distribution at the same time.On the one hand,breaking down the institutional obstacles of rural children’s human capital accumulation and promoting the full accumulation of human capital of rural residents can improve China’s overall human capital and promote innovation,thus promoting economic growth(Becker,1964);On the other hand,human capital affects the wage of residents in the labor market,so improving human capital of rural residents is conducive to increasing their income and narrowing the income gap between urban and rural residents(Mincer,1958).At the same time,China’s urban and rural compulsory education public services are not equal,which may be an important institutional factor leading to the above phenomenon.On the one hand,the financial investment in education determines the quality of the school to a large extent.The data shows that,except for the first-tier cities-Beijing,Shanghai,Guangzhou and Shenzhen-the average financial expenditure of students in urban areas is higher than that in rural areas,and the gaps among second-tier cities and junior high schools are more salient.This difference is further reflected in the instruments and equipment,number of books,and number of teaching staff in urban and rural schools.On the other hand,there are lots of migrant workers in China,and their children are faced with restrictions on school enrollment in the inflow area,resulting in this part of children being unable to enjoy the same public education services as local children.To what extent these two institutional factors affect human capital accumulation and family welfare is the main research issue of this paper.This paper lays the research foundation from both theoretical and data aspects by combing the literature,collecting policies,and quantifying policy indexes.By combing the literature,this paper finds that the previous literature has rich discussions in the field of human capital,but the discussions based on micro-data are mostly qualitative analysis,lacking rigorous quantitative evidence.Moreover,although the existing literature has discussed the restrictions on non-local enrollment to some extent,the lack of quantification of the difficulty of the restrictions on non-local enrollment in the inflow region has led to the inability to quantify its impact in a rigorous and in-depth manner.In response to the above two problems,we first choose the human capital accumulation function and the framework of the family region discrete selection model in this paper following literature,and then collect China’s urban non-local enrollment policy documents from 2013 to 2016,and quantify the policy requirements in them to form the school enrollment restriction index,which establishes the data basis of this paper.Then,this paper analyzes the human capital accumulation and welfare effect of the equalization of public services in urban and rural compulsory education in China from three perspectives.Firstly,the unequal financial investment in urban and rural public education means that there are differences in the quality of education services received by urban and rural children in schools.Referring to the existing literature,we estimate the nonlinear dynamic accumulation function of human capital by comprehensively using the latent variable model,control function and the minimum distance algorithm,considering the endogenous family education investment.Through counterfactual simulation,the paper quantitatively evaluates the effect of the equalization of urban and rural public education services on the urban-rural human capital gap and income gap.Then,we identify the impact of nonlocal school enrollment restrictions on the probability of rural migrant children staying behind through the compulsory education school age regulation,using the difference-in-differences model and combining with the data from China Migrants Dynamic Survey.According to the conclusion that staying behind is not conducive to the accumulation of children’s human capital verified by existing studies,it can be verified whether the restriction of non-local enrollment has a negative impact on the accumulation of rural children’s human capital in the context of the existence of large-scale migrant workers in China.Finally,in order to further quantify the family’s willingness to pay for public education resources,the welfare effect of the equalization of urban and rural public education services,and provide a certain practical basis for the reform of China’s education financial system,this paper establishes and estimates the family regional discrete choice model,and evaluates the effect of the equalization policy through counterfactual simulation.This paper draws the following three conclusions:(1)The equalization of financial investment in urban and rural compulsory education can reduce the gap between urban and rural children’s human capital accumulation by 37.3%,which can be reduced by 12.4% when converted into wage.According to the estimation results of the dynamic accumulation function of human capital,there is complementarity between various input factors including family education investment and public education investment.(2)The increase of the school enrollment restriction index per unit will increase the probability of the school-age children of migrants to stay behind by about 2.8%;The difference of non-local enrollment policy can explain 9.2% of the regional difference in the probability of school-age children staying behind.The housing price in the inflow area has strengthened the impact of school enrollment restrictions on the retention of schoolage children,but the "point accumulation system" has reduced the adverse impact of housing prices on the retention of school-age children of the migrants through more flexible institutional arrangements.(3)The average willingness to pay for compulsory education public services of families with school-age children is 2.8%-4.3% of their annual income.Based on the median income of the sample-46464 yuan,the range of this willingness to pay is 1301-1998 yuan.The counterfactual simulation results show that when the other factors remain unchanged,the cancellation of the non-local school enrollment restrictions in all cities will lead to the improvement of the welfare of the experimental group,which is mainly driven by the reform of the high-income areas where the inflow population is concentrated.Compared with the previous research,this paper may be innovative in research perspective,research data and methods.In terms of research perspective:(1)The article quantifies the equalization of public services in urban and rural compulsory education from multiple perspectives,which is an important supplement to the literature in the field of equalization of public services.Most of the existing literature measures the urban-rural differences based on the national level urban and rural education financial data.This paper,based on the district and county level education financial data,is conducive to more detailed and accurate portrayal of the inequality of public services in urban and rural compulsory education,and is conducive to a more in-depth causal analysis and mechanism discussion in combination with household microdata.In addition,this paper also depicts the inequality of public education services faced by migrant workers from the perspective of the possibility of migrant workers’ children receiving public education in the destination.Due to the existence of large-scale migrant workers in China,the existing literature has not reached an agreement on how the non-local school enrollment policy affects the migration,education investment behavior and welfare of this group,so quantifying the non-local school enrollment restriction index is an important supplement to the literature in the field of equalization of public education services.(2)This paper estimates the dynamic accumulation function of human capital of urban and rural children in China,which is an important supplement to the literature in the field of human capital.With the help of policies and other exogenous events,the previous literature has made qualitative analysis of the impact of maternal income,public education investment,family structure and other factors on the development of children’s human capital.This paper supplements the literature in this field by estimating the dynamic accumulation function of human capital.Specifically,a complete estimation of the nonlinear dynamic accumulation function of human capital is conducive to understanding and characterizing the dynamic sustainability of human capital accumulation,as well as the substitution and complementarity between various input factors,and evaluating the human capital accumulation effect of the equalization of public education services through counterfactual simulation.On the one hand,the relevant research supplements the literature in the field of human capital accumulation in China;On the other hand,it is conducive to understanding the human capital accumulation effect of China’s public education equalization policy,which has certain policy implications.(3)The article depicts the discrete choice behavior of family regions,calculates the willingness of families to pay for public education services,and is an important supplement to the literature in the field of public services and family behavior.Previous studies have explored the impact of the Hukou system on population mobility,essentially exploring the impact of the supply and availability of urban public services based on the Hukou system on population mobility.This paper discusses the impact of the availability of public education services for migrants on population mobility from the perspective of the non-local school enrollment policy,which is a supplement to the above research on the Hukou system.In addition,this paper calculates the willingness of migrant families to pay for public services of compulsory education,and the impact of cancelling the restrictions on the family welfare.The relevant quantitative analysis conclusions are conducive to the policymaking department to conduct profit and loss analysis and policy optimization design.In terms of research data and identification methods:(1)As for index construction method,based on the original data collected from the non-local school enrollment policy documents,this paper uses linear and nonlinear dimensionality reduction methods to synthesize the index,which can overcome the problem that the traditional linear dimensionality reduction method will lead to errors when there are many discrete variables in the original data,and to some extent achieve the innovation of index construction and policy quantification methods.(2)Based on the research problems and purposes,this paper uses structural models to depict the dynamic accumulation function of human capital and the discrete selection behavior of families from microdata,and realizes the combination of theoretical models and microdata.Under this research paradigm,counterfactual simulation can be carried out on the policy of equalization of public services in compulsory education to provide a prediction of the effect of policy reform.(3)In addition,this paper effectively deals with the endogenous problem.China’s Compulsory Education Law stipulates the school age of compulsory education.Whether the children are in the school-age stage of compulsory education provides a natural grouping rule for this paper to identify the equalization of public services in compulsory education.In this paper,when assessing the impact of nonlocal school enrollment restrictions on children,we use the strategy of differencein-differences to overcome the endogenous problem.In the family region selection model,the identification strategy of difference-in-differences is also nested to realize unbiased estimation of parameters.