Research On The People’s Livelihood Effect Of The Government Public Investment In China

Government public investment is an important method of the public management function and macroeconomic regulation and control, which the government implements all over the world. With the rapid development of market economy, China is facing unbalance between economic and social development, and livelihood issues become increasingly serious. Therefore, the theory study of government public investment and the way to reasonable use of it have become the major concern of the whole society. In the area of public investment, usually put emphasis on the research of the public investment effect on economic growth but neglect concern with the effect on social and livelihood. In the study of people’s livelihood, scholars are usually confined to "meaning of the people’s livelihood-historical development-livelihood status quo-how to improve people’s livelihood" research path, but pay less attention to empirical research on people’s livelihood. Therefore, this paper carry out a systematically study on the mechanism and effect of China’s public investment on people’s livelihood, and take empirical tests and analysis based on China’s data, which will help us to have a clearer understanding of the role of public investment in people’s livelihood. This paper has important theoretical and practical significance for our government to optimize the structure of public investment to improve social welfare.This article defined the improvement of people’s livelihood as:the supply of public goods and private goods on the market can meet people’s consumption demand to raise the level of consumer utility, making people satisfied with their lives. According to the impact of public investment on different products consume demand, we divided the effect of government public investment on people’s livelihood into direct and indirect effects. Direct effect refers to government public investment directly contributed to the increase of public goods supply which can meet people’s demand for public goods to improve consumer utility. Indirect effect refers to government public investment has impact on economic development, employment, income and other aspects, all of these will have an effect on supply and consumption of private goods. On the basis of relevant theoretical analysis, this paper analyzed the mechanism of the direct effect, employment effects and income effects of the government’s public investment, and proposed theoretical assumptions:(1)There is a positive correlation between government public investment and education, social security and other public goods supply.(2) Government public investment has a positive effect on employment.(3) Government public investment can optimize the structure of employment.(4) Government public investment can promote the income of urban residents.(5) Government public investment can promote the income of rural residents.Based on the theoretical analysis and the objective data of1990-2012, this paper took empirical analysis through cointegration test, VAR and EMC. The results verified the five theoretical assumptions. Firstly, government public investment can improve the level of education and social security directly. Secondly, government investment can reduce urban registered unemployment rate in the short term, but in the long-term the non-government public investment play a major role on reduce the urban registered unemployment rate. Thirdly, government public investment can optimize the structure of employment, prompting labor transfer from the primary industry to the secondary and tertiary industries. Fourthly, government public investment play a major role in income increase in long-term, while the income level in short-term is mainly effected by the early income and non-government public investment.Based on above analysis, government public investment can contribute to the improvement of people’s livelihood. In the public investment process, our government should define the scope of government public investment based on the demand for public services and make adjustments according to the stage of economic development, optimize the structure of government public investment and transfer the government public investment from public infrastructure to public service, change the investment focus from urban to rural areas and increase rural investment to increase farmers’ income and narrow the income gap between urban and rural areas. In the meantime, the government public investment should play the role of guidance and supervision and pay attention to the role of non-government public investment in the promotion of people’s livelihood.