Education policy and economic development: an empirical analysis of the effects of China's higher education quota allocation plan on regional economic growth
Date
2018
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Delaware
Abstract
China has been experiencing tremendous economic prosperity since the initiation of the Economic Reform in 1978. However, such enduring success has been dampened by significant economic inequality among provinces. In the same period, we have observed another kind of inequality in China that has long been overlooked. As a legacy from the central planning economic system, Chinese higher education policy makers have been implementing quota limits to control and adjust college enrollment in each province. As a result, the allocation of higher education quotas has long been unbalanced, causing inequality in higher education opportunities among provinces. It also makes higher education quotas an appropriate and unique measurement for regional human capital levels in China. In this paper, I collect and analyze over 30 years of panel data in China, from 1985 to 2015, to examine the relationship between inequality in regional higher education access and economic development. I base my analysis on an augmented Solow model and then expand it to test the direct effect of the higher education quota on economic growth, as well as its indirect spillover effect on Total Factor Productivity by applying fixed-effect regressions and two-stage least square regressions. The estimation results confirm the positive and significant effect of higher education quotas on economic growth in China. The subsequent scenario forecasts provide insight into policy implications to find the balance between eliminating inequality and maintaining economic growth.