Human Capital Misallocation in China's Transition Period: Sectoral and Regional Imbalances

During China's transition period, there exists a pronounced misallocation of human capital and its associated consequences. This misallocation is evident across sectors, with Jing and Yu (2019) highlighting the greater concentration of human capital in China's public sector compared to market-based industries. This trend is driven by a preference for high-income monopolies such as government agencies and finance, resulting in labor shortages in computer and high-tech industries (Yian, 2019). Furthermore, the misallocation of human capital between regions is more severe, as Jin (2019) notes. The distribution of human capital in China is characterized by underallocation in the Eastern region and overallocation in the Central and Western regions, further deviating from the objective of balanced development.