The Research On Human Capital In The Form Of Equity

Human capital investment promotes technological progress,improves labor productivity,but also determines whether the economic transformation can succeed.In the 21 st century,what we need is not only research and design talents,but high-tech talents(Xiong,Li;2010).In recent years,domestic investment in human capital has been on the rise,the government,enterprises and families all have increased their investment in human capital,especially in education.Education funding data published by National Bureau of Statistics in 2009 to 2013 shows that the growth rate of financial education funding in 2011 reached a peak value of 21.94%,and has been declined in the next two years,the growth rate was only 5.92% in 2013.The report distributed by industry information network also shows that the scale of China's household education spending continued to rise,from 393 billion yuan in 2004 up to 983 billion yuan in 2013,but the growth of which has been declining,from 18.80% in 2007 to 5.47% in 2013.In addition,as human capital investment is great risky,and investors have to bear the risk alone,so human capital investment in the form of debt has also been inhibited.Facing a huge domestic demand for talent,human capital investment in the form of equity can transfer part of risks from the investment subjects of human capital to investors,so as to provide reference for the further increase of human capital investment.This paper puts forward the human capital investment model of equity form,and theoretically analyzes the necessary conditions of human capital investment in equity form.And respectively compares the optimal human capital investment in the form of debt and it under the cases of non-financing and exogenous financing constraints.Then we study the distribution effect of human capital investment in equity form,inspects the evolution of family wealth accumulation and the distribution of property under non-financing,exogenous and endogenous financing constraints.It also studies the relaxation of the penalties for default and the influence of the father's bequeathed preference on the model results.Finally,it analyzes a case of human capital investment in form of equity so as to confirm the conclusion of the human capital investment model.Through the analysis of recent human capital investment literature,the equity human capital investment model and the human capital investment cases,we mainly get the following conclusions:Firstly,through the analysis of equity human capital investment model and cases,it is found that under the hypothesis of homogeneity of human capital and risk-free income,human capital investment in the form of equity has certain advantages.It can be seen from the model analysis that no matter it is under non-financing constraints or exogenous financing constraints,the optimal human capital investment in the form of equity will always be significantly higher than in the form of debt.And under the exogenous financing constraint,the gap between the two will be expanded than under no financing constraints.Secondly,through the study of the distribution effect of equity human capital investment,it is found that endogenous financing constraints will not only inhibit the investment of equity human capital,but also affect the accumulation of family wealth rate through the heritage of inter-generational transmission.In the short term,endogenous financing constraints lead to market participants,at an early age,can't get enough capital to invest in human capital,which will damage his income in the middle age and decrease the bequest to descendant in his old age.In the long run,the amount of bequest is directly related to the strength of the next generation's financing constraints.For families those who face strong financing constraints initially,the inter-generational transition will only make them face more and more stronger financing constraints.The result is that families with low initial endowment can't make any human capital investment through equity financing eventually,and the family wealth is at a low level.While the households with relatively high initial endowment face a more relaxed financing constraint,and the financing constraint will weaken with the inter-generational transmission.Therefore,the accumulation of household wealth will naturally be at a relatively high level.Then the accumulation of family wealth appears the trend of polarization.Thirdly,by discussing the assumptions of the theoretical model,it is found that the reduction of default penalty will lead to the decrease of the cost of the default,then the individual's financing constraint becomes stronger,and the upper and lower bounds of the bequest corresponding to the financing constraint will increase.This will also lead a stronger inhibitory effect on the human capital investment,thus exacerbating the polarization of wealth distribution.Conversely,when the father's bequeathed preference is shifted from the heritage to the offspring's income in middle age,individuals will loss more if they choose to default,so the financing constraint becomes more lenient.To a certain extent,it promotes the human capital investment of the financial restraint families,thus eases the polarization of the family wealth distribution.