Human Capital Accumulation, Economic Growth and Social Harmony in Rural China

This paper analyzes the relation among the accumulation of human capital, economic growth and social harmony in rural China based on a cointegration analysis and Granger causality test model. The analysis demonstrates equilibrium among them in the long periods. In the short periods economic growth and social harmony will change 0.48 and 2.38 separately if human capital accumulation in rural China changes every other unit, as the cause of the recent increase in inequality in China. In the long periods imbalance among the three variables will disappear by adjustment for 29 years by about 6.9% biennially. Our findings suggest that economic growth is developmental cause of human capital accumulation in rural areas both in the long term and in the short term. On the contrary, human capital accumulation in rural China just impulses economic growth in the long term since its lagged development makes itself not to release pulling role effectively. Study also shows human capital accumulation does not cause income gap between urban and rural areas. Reversely, the latter will affect the former in the long term, which maybe plays referenced roles for plans and policies. The results of VECM analysis suggest that the goal of quadrupling the farmers´ per capita net income of the year 2008 by 2020 put forward by the CPC has its scientific reasons.