Human Capital Misallocation and Its Implications for China's Transition Period

During the transitional period in China, the misallocation of human capital has become a pressing issue with significant consequences. This phenomenon is particularly evident in the inter-sectoral distribution of human capital, as highlighted by Jing and Yu's (2019) research, which reveals that China's public sector is more human capital intensive than market-based industries. This trend is attributed to the preference of workers for high-income monopolies such as government agencies and finance, leading to labor shortages in computer and high-tech industries (Yian, 2019). Moreover, the misallocation of human capital is even more pronounced between regions, as Jin (2019) points out, with the Eastern region exhibiting underallocation and the Central and Western regions experiencing overallocation. This regional disparity in human capital distribution is a significant deviation from the goal of achieving balanced development.