Heterogeneous Human Capital And Regional Income Disparity From The Perspective Of New Economic Geography

Since the reform and opening-up, the economy of China is developing more and more rapidly, people’s lives are getting better and better, but the regional income disparity is getting greater and greater at the same time. China has a large population, but is short of heterogeneous human capital with high quality. Based on the knowledge economy era, the geographic distribution of heterogeneous human capital always has an important effect of regional economic development. This dissertation focuses on this topic, and makes theoretical and empirical analyses on this issue with the basic theory of new economic geography.Firstly, the dissertation is based on Footloose Entrepreneur Model (FE Model), and human capital is divided into two types:heterogeneous human capital and homogeneous human capital. We build a model of new economic geography including heterogeneous human capital by introducing heterogeneous human capital and standardizing the model. At the same time, the article considers the influence of the trade freedom, foreign direct investment and institutional factors. Secondly, we analyze the relation of the two types of human capital, regional specialization and income disparity by using thirty provinces and cities panel data from2001to2010. The results show that human capital accumulation is an important factor in regional specialization and income disparity. The accumulation of heterogeneous human capital can improve the level of regional specialization in the short term, but contribute to larger regional income disparity in the long term. However the accumulation of homogeneous human capital hinders regional specialization in the short term and income disparity in the long term. In the specific area, the higher the trade freedom is, the more foreign direct investment is, the smaller the radio of the industrial output value of state-owned and state-holding enterprises to the gross industrial output value this area is, the higher the specialization is, the greater the income disparity is. In order to reduce regional income disparity, on the one hand, we should increase the ratio of employed owning heterogeneous human capital. Government is required to increase education investment and train high-end talent. On the other hand, the government of the central and western regions should create conditions to attract heterogeneous human capital.