The threshold effect of high-level human capital investment on China's urban-rural income gap
Purpose – The purpose of this paper is to shed light on the effect of high-level human capital investment, using tertiary education as the proxy, on the urban-rural income gap in China. Design/methodology/approach – Using a panel dataset covering 28 provinces of China over the period from 1988 to 2007, this paper employs Hansen's method and two-step GMM-SYS estimator to estimate the threshold regression model and the dynamic fixed-effect panel model, respectively. Findings – The urban-rural income gap is found to be related to high-level human capital investment in an inverted U-shaped pattern with respect to economic development level. The estimated threshold turning point is around 20,000 RMB GDP per capita. This estimate is sufficiently robust to model specifications and variants of the dependent variable. Social implications – The authors forecast that high-level human capital investment could play a role in bridging the urban-rural income gap at the national level by 2014, when China's GDP per capita assumes an annual growth rate of 7.5 percent. Originality/value – This, it is believed, is the first research to find an inverted U-shaped pattern for high-level human capital investment and urban-rural income gap nexus in China. JEL classification: R23
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 3 (2011)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/caer.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yao Amber Li & John Whalley & Shunming Zhang & Xiliang Zhao, 2011.
"The Higher Educational Transformation of China and Its Global Implications,"
The World Economy,
Wiley Blackwell, vol. 34(4), pages 516-545, 04.
- Yao Li & John Whalley & Shunming Zhang & Xiliang Zhao, 2008. "The Higher Educational Transformation of China and Its Global Implications," NBER Working Papers 13849, National Bureau of Economic Research, Inc.
- Blundell, Richard & Bond, Stephen, 1998.
"Initial conditions and moment restrictions in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Scully, Gerald W, 1969. "Interstate Wage Differentials: A Cross Section Analysis," American Economic Review, American Economic Association, vol. 59(5), pages 757-73, December.
- Alan de Brauw & Scott Rozelle, 2008.
"Reconciling the Returns to Education in Off-Farm Wage Employment in Rural China,"
Review of Development Economics,
Wiley Blackwell, vol. 12(1), pages 57-71, 02.
- Alan de Brauw & Scott Rozelle, 2006. "Reconciling the Returns to Education in Off-FarmWage Employment in Rural China," Department of Economics Working Papers 2006-03, Department of Economics, Williams College.
- Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
- Whalley, John & Zhang, Shunming, 2007. "A numerical simulation analysis of (Hukou) labour mobility restrictions in China," Journal of Development Economics, Elsevier, vol. 83(2), pages 392-410, July.
- Lin, Justin Y & Wang, Gewei & Zhao, Yaohui, 2004. "Regional Inequality and Labor Transfers in China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(3), pages 587-603, April.
- Hansen, Bruce E., 1999.
"Threshold effects in non-dynamic panels: Estimation, testing, and inference,"
Journal of Econometrics,
Elsevier, vol. 93(2), pages 345-368, December.
- Tom Doan, . "RATS programs to replicate Hansen's example of threshold break in panel data," Statistical Software Components RTZ00088, Boston College Department of Economics.
- Bruce E. Hansen, 1997. "Threshold effects in non-dynamic panels: Estimation, testing and inference," Boston College Working Papers in Economics 365, Boston College Department of Economics.
- Tom Doan, . "PANELTHRESH: RATS procedure to analyze up to two threshold breaks in a fixed effects panel model," Statistical Software Components RTS00152, Boston College Department of Economics.
- Brown, Philip H. & Park, Albert, 2002. "Education and poverty in rural China," Economics of Education Review, Elsevier, vol. 21(6), pages 523-541, December.
- Alan B. Krueger & Mikael Lindahl, 2000.
"Education for Growth: Why and For Whom?,"
NBER Working Papers
7591, National Bureau of Economic Research, Inc.
- Zhang, Kevin Honglin & Song, Shunfeng, 2003. "Rural-urban migration and urbanization in China: Evidence from time-series and cross-section analyses," China Economic Review, Elsevier, vol. 14(4), pages 386-400.
- Yaohui Zhao, 1997. "Labor Migration and Returns to Rural Education in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1278-1287.
- Rosenzweig, Mark R. & Stark, Oded, 1987.
"Consumption Smoothing, Migration and Marriage: Evidence from Rural India,"
7515, University of Minnesota, Economic Development Center.
- Rosenzweig, Mark R & Stark, Oded, 1989. "Consumption Smoothing, Migration, and Marriage: Evidence from Rural India," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 905-26, August.
- Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
- Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
- Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, vol. 89(2), pages 306-310, May.
- Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
- Zhu, Nong, 2002. "The impacts of income gaps on migration decisions in China," China Economic Review, Elsevier, vol. 13(2-3), pages 213-230.
When requesting a correction, please mention this item's handle: RePEc:eme:caerpp:v:3:y:2011:i:3:p:297-320. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.