Optimal allocation of resources in the material production sector and human capital sector

The largest social welfare is the highest goal that the allocation of resources can achieve, which means the optimal allocation of resources can achieve the ideal state. The thesis builds up a stochastic model and discusses the impact of many parameters on economic growth and social welfare. The author thinks that increasing efficiency of material production sector and human capital sector or the risk will promote the flow of physical capital to human resources and accelerate economic growth and when the contribution of human capital on output is greater than that of physical capital, increasing investment in human capital sector has more significant effect in promoting welfare The conclusion is drawn that proper inputs on the two departments have an important impact on enhancing economic growth and welfare.