区域经济学regional-economic-development第五章.ppt

,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,LESSON 5,Human Capital is investment in people just as physical capital is investment in machinery,tools,equipment,etc.,Human Capital is just as important as physical capital and in terms of regional development,it matters a great deal.,Human capital theory looks at labour as a differentiated input or factor of production.,It sees the possibility of improving the quality of labour through education,on-the-job training,improved health,better nutrition,etc.,Money spent on any of these activities in order to improve the quality of labour should be treated as investment,just as we call spending on new machines physical capital investment.,Education is most often used as a proxy for human capital investment.,But it is important to recognize that education in terms of the formal school system may be a very imperfect measure of human capital investment.,This being said,if we calculate the rate of return of various levels of education we find high rates of return for all levels of education,with primary education being the highest,secondary education next and higher education third.,The way these rates of return are calculated is by looking at the difference in income over an individuals working life caused by education.,The rate of return is,revenue/cost x 100%,when all revenue and cost items are expressed in current dollars.,Generally speaking,studies of the rate of return to education done in this way show all levels of education with private rates of return higher than the opportunity cost of capital.,This means that spending money on education yields a higher rate of return than most alternative uses of the money.,Under these assumptions,we get,Social rate of return=increase in lifetime earnings/total cost of education,Private rate of return=increase in lifetime earnings/private share of total cost,Where private sharetotal cost,These studies also argue that more money should be spent on primary education than on secondary education and more on secondary education than on higher education because this reflects relative rates of return.,It is certainly true that there are many examples of high returns to primary education.A World Bank study,for example,shows the proportion of growth in high performance Asian economies predicted by enrolments in primary education.These numbers are all above 50%and some are above 85%.,But this still leaves open the question of who pays.,To answer this,we have to introduce the concept of externalities and imperfect markets.,Externalities are benefits or costs received by or imposed on parties other than the direct participants in an economic transaction.,In the case of education,we can argue that there are significant positive externalities,i.e.,significant external benefits,from more education.,These externalities include things like new knowledge creation,more efficient workers,more worker cooperation producing productivity gains,etc.,This means that it could be justified for government to pay for some parts of education because private persons may buy too little and these externalities will then be less than they should be.,But we still need to know whether the private return is greater than the opportunity cost of capital and whether the right amount of education will be bought by private individuals.,We can show that some subsidies may be required even under relatively perfect market conditions to get the optimal amount of education.,But we also have to take into account that markets are not perfect.,In this case,more subsidies may be required to achieve the optimal amount of education.,The three readings for this section of the course all deal with the case of China.,One of these papers looks at human resource investment specifically after first observing that regional inequality in China has soared in the last 20 years.,The gap between the coastal region and other regions has increased significantly since 1991.By 2003,the ratio of real per-capita GDP between the wealthiest province and the poorest was 8.65.The northeast region which was the leading region in real per-capita GDP in 1978,by 2003 was 30%behind the coastal region.The coasts advantage over the interior region and the far west was 2.4 in terms of the real per-capita GDP ratio.,These are very significant numbers.,The authors argue that human capital affects output in three ways:,Educated labour directly contributes to production,The proportion of workers with senior high school or above directly affects TFP growth via its effect on innovation.,There is an indirect spillover effect of human capital on TFP growth.,The overall conclusion of the paper is that human capital investment in less-developed areas can enhance economic efficiency and reduce inequality.,They argue that the Grand Western Development Project which involves enhancing infrastructure in 11 western provinces should be doubled to provide equal funding to human capital investment and that this will do more to reduce inequality than infrastructure alone.,Endogenous growth theory says that human capital is one of the factors that drives growth and that it does so through innovation activities.Thus regions that are richer typically have higher levels of educational attainment and are able to use this to further innovation activity and grow even faster as a result.,Based on the statistical analysis in this paper,the main conclusions are:,Innovation activities significantly increased across China from 1997-2006.,The spatial spillovers of innovation activities also rose a neighboring province effect.,The%of college-educated workers is a significant predictor of regional innovation intensity.,Over time the impact of education on innovation has decreased.,The third paper in this section looks at some further aspects of human capital in a regional context.,The paper by Fu and Gabriel is concerned with internal labour migration in China and how this has affected regional disparities.More specifically,they examine whether the concentration of skilled labour in major urban centers creates spillover benefits for skilled labour that cause skilled labour to become even more concentrated in regions which are already employing more skilled labour and in the process make regional disparities worse.But they also look at how this impacts on low-skill workers.,The study finds that the motivation for migration differs between low-skill and high-skill workers.The former are influenced by the amenities at their destination as well as human capital concentration and other aspects of human capital agglomeration.Unskilled workers,by contrast,are not influenced by these things,nor is there much interaction between low and high skill workers.,More interaction between the two groups would benefit the unskilled workers and lead to them acquiring more skills and moving up in the labour market.But they do not because they do not permanently relocate and acquire no interest in settling in the place where they may happen to be employed.This is mainly a function of the hukou system.,Overall,what they conclude is that labour migration,if permanent,could help reduce regional disparities while also adding to overall national growth by fostering a more efficient allocation of labour.But because it is permanent only for skilled workers,the discrepancy in skilled labour becomes more extreme while the adjustment mechanism of the labour market overall fails to reduce regional disparities because it cannot work as it should.,A problem with this analysis is that the market adjustment mechanism the authors favour works in part by lowering the returns to labour in the prosperous region rather than just raising them in the less prosperous region.But this aside,the study confirms the conclusion reached in China 2030 that the hukou system impedes labour mobility and there is a need to break the link between the hukou and various social services such as education.,