A spatial econometric study on the role of human capital on China's total factor productivity growth

Abstract

Using Spatial Benhabib-Spiegel model, the authors construct the distance decay spatial weights matrix to study the spatial spillover effects of human capital on total factor productivity growth. It is found that the role of the human capital on the growth of total factor productivity depends on the level of human capital of the test region, the human capital of neighboring regions, as well as the technological catch-up effect considering the geographic distance of the test region. The results shows that the average level of human capital plays a positive role in promoting total factor productivity growth, besides that, the human capital of neighboring regions has positive spatial spillovers on the total factor productivity growth of the test region. In terms of idiosyncratic human capital, the spatial spillovers of different types of human capital on total factor productivity growth demonstrate significant differences. Specifically, the spatial spillover effect of human capital in primary education on total factor productivity growth is not significant, the spatial spillover effect of human capital in secondary education on total factor productivity growth shows a significant positive effect, by contrast, higher education human capital shows a negative effect. It comes to the conclusion that regions must choose a reasonable moderate level and structural human capital.