The Effect Of Free Compulsory Education On Rural Residents’ Consumption In China

In the process of reform and opening up,"export" and "investment" supported our country’s economic growth in the past thirty years. But with the social and economic developments and reforms, the function began to be weakened. At the same time, the contradiction between consumption and investment and export became more serious. For a very long time, consumption has been the short board of Chinese economic development. And rural residents’consumption takes a very impotent place in the national consumer market, which has not yet been fully launched. However,"Rome wasn’t built in a day", there has a deep reason that why the rural residents’consumption has been suppressed. In order to start the rural residents’consumption, we need to find a good breakthrough.Recently, education, healthcare and housing, which are regarded as "the new three big mountains", together with income restrict the consumption level of rural residents. Considering the particularity of expenditure and income, education is the most crucial factor among the three factors. Education level is gradual, and education time is replaceable, and education expenditure is viscous, and future is uncertainty. So we should pay attention to basic education.In2008, free compulsory education is implemented in all rural areas in our country. From the emotional view, this measure transfers the education cost from farmers to the government, so that release the rural residents’consumption. But what the real effect of this policy on consumption is uncertain. Therefore, analyzing the impact of free compulsory education on the rural residents’ consumption is not only about education or consumption itself, but also about education investment, consumption promotion and balanced regional development, which are impotent for the transformation of the pattern of economic development.In order to analyze the effect of education on rural residents’consumption, it’s necessary to answer the following questions. What role does free compulsory education paly in the rural residents’consumption? How do the effects take place? Does the impacts changed in the past? Does the experience of the abroad have any reference meaning for us? How to use the policy of free compulsory education to move the rural residents’consumption market and promote the sustainable economic developments? This article tries to answer the above questions step by step.Around the subject of "the impact of free compulsory education on rural residents’consumption", this article firstly analyzes the mechanism of the effect. Then it combed the related education policies since1949, and analyzes the changing of the relationship between free compulsory education and rural residents’consumption since1986, when the "Compulsory Education Law" was enacted. According to the historical analysis result, this article analyzes quantitatively the impact of free compulsory education on rural residents’ consumption during1996to2012, furthermore it compare the effect of free compulsory education policy among east, central and western regions. In addition, this paper tries to find some inspiration and reference from American, Germany and Japanize compulsory education. Finally this paper gives some policy suggestion basing on the theoretic analysis, quantitative analysis and foreign experience analysis.This paper unfolds the analysis according to the logic of "questions-analysis problem-solve problem".The first chapter is the introduction. In this chapter we mainly introduce the research background, theoretical and practical significance, the definition of core concepts, research content and method, and the possible innovation and shortcoming.The second chapter is the part of theory research. Although the compulsory education is a kind of public goods, but in this paper we focus on the mechanism of free compulsory education on rural residents’consumption, so the theoretical foundation mainly discuss the human capital theory and consumption theory. In this article we analyze Marx’s human capital theory and the western human capital theory with Schultz as the representative. We also discuss the consumption theory of Marx and western consumption theory. Based on this analysis we put forward five hypotheses and think that there are four paths through which free compulsory education can influence the rural residents’consumption. First of all, free compulsory education may increase resident income, and then increase consumption. Secondly, free compulsory education can promote the accumulation of human capital, which has a positive effect on future income and consumption. Thirdly, because of the viscous feature education expenditure will increase future spending; so the current spending will decrease. Finally, it is good for promoting the whole social consumption, that the impacts of education on accumulation of human capital are recognized by human.The third chapter is the part of qualitative analysis. In this chapter, analysis is time around. Firstly, we combed the relevant policy of compulsory education in our country since1949, and then analyze the changing of rural residents’ consumption since1986, when the "Compulsory Education Law" was dispensed. We find that the characteristics of the consumption expenditure of rural residents present to be periodic. Furthermore rural residents’ consumption has the same stage division with the development history of compulsory education. The highly relevant historical division lays the foundation for data selection in the empirical analysis part.The fourth chapter is the empirical analysis. This article chooses the provincial panel data during1996-2012to analyze the impact of free compulsory education. In the first place, this paper builds the empirical model according to the assumption and mechanism in the second chapter. After that we use F-test and Hausman test to decide to choose the fixed effect model. Basing on the regression result, this paper explains the significant difference before and after the implementation of free compulsory education on rural residents’ expenditure. Then, through comparing changes of policy effects in eastern, western and middle regions, we find that the effect of free compulsory education on rural residents’ expenditure is the most obvious in western region, coming by middle region and eastern region.The fifth chapter is the international comparison analysis. Considering that the compulsory education policy has not been taken for a long time in our country, there are still many problems in the process of developing education. Since compulsory education is a long and complex project, and other countries have taken the policy for a long time, so we try to find some lessons from the experiences of America, German and Japan, so as to make the free compulsory education policy be more effective.The final chapter is the policy suggestion part. In this part, combining the theoretical analysis, empirical analysis and foreign experience analysis, we think there are three ways to promote the consumption of rural residents by free compulsory education, in the background of transforming economic development model. Firstly, build a social security system and a lasting income mechanism to increase the permanent income of rural residents. Secondly, promote the balanced development of free compulsory education in all regions, by constructing a free compulsory education funding system and encouraging social participation. At last, improve the overall quality of students, by improving the educational legislative level and changing the mode of compulsory education development.There are three possible innovations.(1) The research perspective. This article, which considers both consumption and investment properties of education and takes the free compulsory education policy as the breakthrough point, analyzes the mechanism and policy effect of free compulsory education. To some extent, this research is also about the development issue of how to become rich from poverty.(2) The research method. In this article, time is divided by policies and historical events. Positing the reasonable time period step by step, gerents the rationality of the data used in empirical analysis.(3) The research content. The rural residents have low risk capacity and huge consumption potential. This paper, choosing the rural residents as the research objects, analyzes the impact on promoting the rural residents’consumption in the western regions, middle regions, eastern regions and the whole country. At the same time, it studies compulsory education experiences in developed countries. On the whole, the research contents, mentioned above, make the content more fulfilling.