China Human Capital Report 2011
Executive Summary
In this project we estimate both national and provincial (Beijing, Liaoning, Jiangsu, Guangdong, Gansu) human capital stocks for the period 1985 to 2008, using the Jorgenson-Fraumeni lifetime income approach. An individual’s human capital stock is equal to the discounted present value of all future incomes he or she can generate. In our model, human capital accumulates through formal education as well as on-the-job training. The value of human capital is assumed to be zero upon reaching the mandatory retirement ages.
1.China’s total real (nominal) human capital reached 90.5(370) trillion yuan in 2008, implying an average annual growth rate of 6.72% during 1985-2008, and 7.67% during 1995-2008. Urban (rural) real human capital in 2008 was 56.7 (33.8) trillion yuan, accounting for nearly 62.6% (37.4%) of total real human capital (that is, human capital measured at 1985 prices).
2.Per capita real human capital tripled during 1985-2008, reaching 81.3 thousand yuan in 2008. Urban (rural) per capita real human capital was 109.5 (56.7) thousand yuan. Male (female) per capita real human capital was 92.0 (69.3) thousand yuan in 2008. In addition, total human capital grew at a higher rate than per capita human capital before 1995, but the two grew at more comparable rates after 1995.
3.The urban and rural gap in total and per capita human capital has widened. Rural total human capital grew at an annual rate of 4.66% during 1985-2008, while urban total human capital grew 8.67% per year over the same period.
4.Both total and per capita human capital are larger for males than for females. While the gender gap in human capital rose in urban area, it decreased in rural area over the period studied.
5.The growth rates of the partial Divisia index based on education and location are higher than those based on age and sex, implying that education and urbanization have a greater impact on the accumulation of human capital in China.
6.China has a large total human capital stock, but small per capita human capital compared to other countries. China’s per capita human capital stock is one-fourths of Canada’s and one-sixths of USA’s. Thus, there is still a long way to go before China will become a leading country in human capital.
7.The growth rate of human capital was lower than the growth rate of GDP and the growth rate of physical capital; the ratio between human capital and GDP and the ratio between human capital and physical capital were decreasing in China.
8.Assuming that the values of our model parameters remain constant at their 2008 levels and only population changes for the period 2009 to 2020, our projection shows that total and per capita human capital will grow at a much lower annual rate, and rural total human capital may even decline.
9.We provided human capital stock estimates for five provinces (city): Beijing, Liaoning, Jiangsu, Guangdong, and Gansu.