Research On Relationship Between Human Capital Investment And Urban-Rural Income Gap In China

Fairness and efficiency are not only a pair of basic contradiction in people's economic life but also a theme which has been argued in economics circle from beginning to the end.During the 30 years when China starts to intensify the strength of opening up and implements market-oriented reform,our economic efficiency has enjoyed great release.Rapid economic development has drawn attention of people all over the world;people's income has seen an obvious increase.Meanwhile,income gap—the "sword of Damocles" has been hanged over our heads.According to the State Statistics Bureau,Gini Coefficient of national resident income in 2015 is 0.46.Compared with warning line standard of international Gini Coefficient,0.40,income gap in our country has become a severe problem and the gap of income between urban and rural is particularly prominent.If there isn't good solution to the knotty problem,it may not only become an important factor that hinders development of economy but also be likely to destroy the stability of society and cause social division.Although there isn't a uniformly acknowledged theoretic system of income distribution formed in Economics Circle,there are some economic theories that can be used to analyze income distribution issues.Among them,Human Capital Theory can be well utilized to analyze the income distribution problem from perspective of market.Difference in human capital investment will lead to gap of income distribution.However,in reality,there is complicated relationship between urban-rural income difference of our country and human capital investment between urban and rural.If the interactive mechanism between the two can be made clear,the target of giving consideration to both efficiency and fairness will find more theoretic and practical support.This article firstly defines the concept of income gap and human capital investment.Then,it respectively reviews and sorts through relevant domestic and foreign research literatures,which provide numerous ideas and breakthroughs for writing this paper.Meanwhile,this paper has looked back to evolution progress of urban-rural income gap and difference of human capital investment in recent three decades.Distribution and input-output change of educational&medical and health resource are used in this paper to approximately reflect evolution of human capital investment gap.Through the descriptive statistical analysis,we can see that urban-rural income gap of our country coincides with human capital investment difference in their evolution progress to some extent.The gaps of both enlarge at first and there is tendency to become small in recent years.Next,based on the theoretic framework of Golar&Zeira(1993),this paper made certain extension.Starting from characteristic of Chinese economic development,the assumption of coexistence of dual economy is brought in.That is to say,modern production department with changeless return of scale and traditional production department with decreasing return of scale are introduced.In addition,by combining the assumption in the original theory that wealth distribution is unbalanced and the credit market is incomplete,it analyzes the influencing mechanism between long-term and short-term individual strategies of human capital investment and income gap from theoretic perspective.On basis of theoretic analysis,by establishing the Vector Auto-Regression(VAR)model and combining the data between 1981 and 2014,this paper has empirically analyzed the relationship between urban-rural income gap and difference of human capital investment.Theoretic analysis result of the paper indicates that difference in urban and rural wealth and resource distribution may cause wider gap in urban and rural human capital investment,which in turn will further widen the urban-rural income gap and form "the Matthew Effect".However,results of empirical analysis verify the result of theoretic analysis to a great degree.Widening of human capital investment gap is an important reason for expansion of urban-rural income gap;while expansion of urban-rural income gap is the cause of wider gap in urban and rural human capital investment.The influence is limited.In accordance with these research results,this paper puts forward some practical and feasible suggestion and policy.It mainly starts from shrinking the gap of education,medicine and health care between urban and rural area,strengthening the educational investment and supports to rural area,perfecting the social security system and improving the level of medical treatment and public health in rural area so as to further narrow the urban-rural income gap.Certainly,this paper suffers many deficiencies which are mainly reflected in measurement of human capital,which hasn't been solved in international academic circle.The choice of education and health investment can only approximately represent situation of human capital investment.Therefore,it demands human capital theory which is more impeccable and consistent with reality.In addition,it also requires more complete data with longer time span and it needs to be further researched.