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The Effect of Higher Education Expansion on Economic Growth:Human Capital Accumulation or Signal Interference?

【Authors】
SHAO Yihang, XU Jing
【WorkUnit】
Xiamen University
【Abstract】

This paper discusses the effect of higher education expansion on modern economic growth. Based on Schumpeter growth model, we build a theoretical model to analyze the effect of higher education expansion on economic growth through innovation. On the one hand, the expansion of higher education lifts human capital which might enhance the overall innovation capacity and economic growth. On the other hand, because of asymmetric information, the expansion of higher education may deteriorate signal interference in R&D personnel selection and produce negative effect on growth. Therefore, the effect of higher education expansion may vary with the development stage. Furthermore, the empirical analysis of provincial panel data supports our theoretical conclusion. In general, the effect of Chinese higher education expansion on innovation and economic growth rise at first and then fall, presenting “inverted U” type. Finally, this paper also gives a brief discussion on practical significance.

 

JEL:J24, O11, O33

【KeyWords】
Expansion of Higher Education, Economics Growth, Innovation, Inverted “U” Relationship