The Threshold Effect Of The Impact Of Education Expenditures On Regional Economic Growth

Economic growth matters the national economy and people’s livelihood. For a long time, a myriad of economists engaged in searching the reason of economic growth. Based on the classic theory of human capital, for a country or region, the fundamental factor of long-term economic growth is the enhancement of human capital and the widespread use of new technology. The theory of new-economic growth also claims that the spillover of human capital have an impact on physical capital, and will improve the efficiency of economic output. Taking into account of China’s national conditions, the labor resource is plentiful but money capital, the technical and natural resources are scarce. The problem of how to turn labor force advantage into human resource advantage, and exert the spillover of human capital, then develop a strong, sustained reason of economic growth, has become the focus of attention of scholars in our country.As one of the most important human capital investment, education investment plays an especially important role in promoting the increase of economy. In some empirical research, the human capital includes so many factors such as education, health and the geographic migration of labor, which makes the measurement of human capital very difficult. So many scholars turn to study on the promotion of economy by education investment. They are trying to estimate the contribution of education to economic growth through a series of econometric analysis method. Yet most of the existing literature is based on national or individual province (or city and districts) for individual time series studies. For the study of long-term, dynamic and the nonlinear relationship of education and economic growth, the division of time interval and the standards are exogenous given. Based on this, this article uses the threshold regression analysis method and the panel data of13years (1998-2010) to investigate our country’s31provinces (cities or districts). The purpose of the research is to verify the difference of the education’s contribution on economic growth in different areas in China, analyzes the cause of this phenomenon, and gives the relevant policy recommendations.In the first chapter of this article, the author firstly clears about the selected topic background and significance, research ideas and methods, did a simple review on the related theory at home and abroad. In the second chapter, the author reviewed the fundamental idea of human capital theory, economic growth theory and the education investment theory. Then the author found out the internal relationship of these theories, so as to provide a strong theoretical basis for subsequent research. The third chapter is the current situation of the overall and provincial description of education investment in today’s China, some problems are also figured out in this chapter. The forth chapter is the empirical research, in this chapter, the existence of the threshold effect is verified by a threshold regression model, the threshold variable was determined and the threshold value was calculated. Finally China’s31provinces (cities and districts) was divided into4groups, including low education investment group (regional education comprehensive index less than10.4), the medium low education investment group (regional education comprehensive index between10.4and13.1), the medium high education investment group (regional education comprehensive index between13.1and15.6), the high education investment group (regional education comprehensive index more than15.6), and the elasticity coefficient of education comprehensive index on economic output was0.1754,0.1967,0.2903and0.3790respectively. The fifth chapter combined the empirical research conclusion and China’s specific national conditions, and based on promoting human capital configuration and industrial structure optimization, gave some suggestions on how to improve the efficiency of education investment output in different regions.