An Empirical Study Of The Contribution Of Human Capital To Economic Growth Of Shandong Province

Since the implementation of the reform and opening, Shandong Province has maintained a rapid economic growth. Numerous studies show that capital, technology and management are major factors in a country’s or a region’s economic growth. Capital includes both material capital and human capital, and in the process of economic development, the status of human capital has become increasingly prominent, so human capital has gradually become the main source of economic growth in a country or some regions.Taking Shandong Province as an example, first by referring to the relevant literature, we propose the concept of human capital and measurement methods, meanwhile we define a clear mechanism of interaction between human capital and economic growth. This article pointed out that human capital is attached to the person relying on a capital investment acquired formed. The external manifestation is that man has the knowledge, skill, health, etc., and it can be transformed into real productivity, thus it can make a continuing effect to the society and economy. At the same time, we use years of education to measure the human capital. Years of education will be divided into five categories, which are illiterate and semi-literate (no schooling or primary school) for1year, six years of elementary, junior9years, high school12years, the university (tertiary and higher education) for16years.In each level with a degree, we use years of education and the product of the number of employees to represent the level of human capital stock.Secondly, we select the1996-2011data. We take GDP in Shandong Province as output variables, and we use material capital, human capital and other factors as independent variables. On the basis of effective labor models and external model, combined with the relevant econometric learning software for empirical studies, we explore the contribution rate of human capital in Shandong Province. The research shows that in effective labor model, the contribution rate of human capital to economic growth0.459percentage points lower than material capital in Shandong, which shows that the human capital contribution to economic growth is significant. In addition, the study also finds that education is an essential factor to promote economic growth. Education brings the accumulation of personal knowledge, and knowledge has played a much more important role in economic growth than simple labor input. By comparing the two models, we find that human capital not only has the effect of production, but also has the effect of external nature, which is to say, human capital not only directly promote economic growth, but also play an indirect role. Direct contribution of human capital to economic growth rate is31.977%, while the indirect contribution rate1.204%, the total contribution rate is33.181%, which also shows the economic development of Shandong Province rely on material capital more than human capital.Finally, combining theoretical and empirical analysis of concrete results, we pointed out the problem in the development of human capital in Shandong Province. The paper believes that the current level of investment to human capital in Shandong Province is not enough, we must experience a long time to transform development mode of economy. To solve these problems, this paper proposes four specific policy recommendations:First, as we know education plays the most direct effect in the development of economy, therefore we should increase investment in education and build a diversified investment in education system; Second, we should encourage enterprises to develop staff job training, and strengthen investment; Third, we should improve the flow of talent market mechanism so that the flow of talent is more reasonable; Finally, we should increase investment in health systems to ensure the quality level of all the people is good.