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Factor Endowments, Wage Inequality and Human Capital Formation
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TitleFactor Endowments, Wage Inequality and Human Capital Formation  
AuthorLi Chengyou, Sun Tao and Jiao Yong  
OrganizationShandong University;; 
Key WordsFactor Endowments; Wage Inequality; Human Capital; Dynamic Evolution Model 
AbstractThe study uses 2003-2015 panel data of 31 provinces and builds dynamic evolution model of human capital formation under the heterogeneity of factor endowments and wage inequality with constant elasticity of substitution production function and monopoly competition hypothesis. Combining the heterogeneous enterprise trade model and expanding it, this paper discusses the mechanism of factor income decision under the condition of factor market clearing. And it empirically analyses the influence of factor endowment on the formation of human capital in the background of wage inequality. It finds that:(1)The rise of the capital stock inhibited the formation of human capital, but labor is favorable for the formation of human capital.(2)The wage inequality between skilled labor and low skill labor significantly positive influence on human capital formation.(3)Wage inequality significantly promotes the incentive function of the capital stock to human capital formation, but wage inequality significantly inhibited the incentive function of labor on human capital formation. Finally, the paper use substitution and addition variables, sample data grouping as well as two-stage instrumental variable regression three types of robustness test. The research shows that in the process of "new normal", which is from intensive input to knowledge intensive investment, from extensive growth to intensive upgrading, the impact of capital on human capital formation is not as good as that of labor force and wage inequality. There are a lot of uncertainty in the jump from capital to human capital. At the same time, the difference between the wage inequality and the factor endowment has the interaction of heterogeneity, which affects the formation of human capital. 
Serial NumberWP1316 
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