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Why Do Talents Flow to the Public Sector——The “Steady Growth” Dilemma and Human Capital Mismatch in Economic Slowdown

【Authors】
LI Jing & NAN Yu
【WorkUnit】
LI Jing (Anhui University, 230601)NAN Yu (Chinese Academy of Social Sciences, 100836)
【Abstract】

Long-term economic growth depends on public services provided by the public sector which, though inefficient, can survive economic slowdown at the expense of sectors of production. As a result, human capital will continue to flood into the inefficient public sector, leading to the mismatch of human capital and the lack of endogenous growth momentum. Theoretical studies have found that there exists an optimal proportion of human capital in the public sector during long-term economic growth. The cases of OECD countries and China have also shown that if the figure is deviated, steady economic growth will be hindered. Meanwhile, compared with OECD countries such as the United States and Britain, China has a human capital-intensive public sector but less intensive market-oriented sectors of production. As China is shifting is economic drive from inputs of factors to innovation, the flock of outstanding talents to the public sector instead of sectors of production will pose serious challenges on steady economic growth. Therefore, this paper suggests changing the mechanism that protects the inefficient sector from economic slowdown, channeling human capital to sectors of production, optimizing the distribution of human capital and maximizing human capital dividends.
 
JEL:D33, E24, E25

【KeyWords】
Steady Economic Growth, Mismatch of Human Capital, Structural Economic Slowdown