NEW EVIDENCE ON THE HUMAN CAPITAL DYNAMICS WITHIN CHINA: IS THERE A HUMAN CAPITAL TRAP?

Abstract

This paper investigates the human capital convergence dynamics within China over the period 1985–2018 using a nonlinear dynamic factor model. Our results indicate that there exist multiple human capital clubs, and the heterogeneity between those clusters is increasing over time. Moreover, we detect a core–periphery division with several provinces located in Western, Northeastern, and Southern China being located in lower human capital clubs. Population and transportation density as well as the initial level of human capital appear to be most decisive for determining whether a province is on a high or low human capital development trajectory.