The Estimation of the Potential Human Capital Accumulation Rate of China in the Future

Abstract

From the perspective that the change in population age structure could affect human capital accumulation, this paper introduces a concept of “the potential growth speed in human capital stock” and discusses the future of China’s human capital growth from different aspects. This paper uses the perpetual inventory method and China’s sixth national population census data to predict the maximum potential space for China’s human capital stock growth in the future. Firstly, we use the average years of schooling of the working-age population as an index to measure the human capital stock. Though decomposing the differences in human capital stock, we introduce the concept of potential growth speed in human capital stock. Secondly, by decomposing accumulation rate of human capital stock in China, differences of human capital stock between China and South Korea, and differences of human capital stock between China and Japan, this paper finds that the age structure change will have a negative factor on China’s accumulation of human capital in the next 20 years. To conclude, China will probably accumulate human capital at a much faster rate until 2040, but the human capital growth potential is fully exploited on the condition of that.