Effects of higher education levels on total factor productivity growth

Abstract

China is facing challenges to sustainable economic growth. Higher education of Chinese residents can affect total factor productivity (TFP) growth and hence has an influence on economic sustainability. However, currently, there is limited literature on the nexus between higher education and TFP in China. Therefore, this paper empirically analyzes the heterogeneous and spatial effect of higher education on the regional TFP growth using a dynamic spatial econometric model with provincial panel data from 2003 to 2016. The results indicate that different levels of higher education have significant effects on TFP growth and are mainly reflected in the spatial spillover effect. Bachelor and doctoral education (particularly doctoral education) demonstrated significant positive effects, whereas the technical school and master education had significant negative effects. When decomposing this effect into technical efficiency and technical progress to explore the mechanism of influences, the latter plays the major role. Therefore, the Chinese government can promote TFP growth and economic sustainability by expanding the scale of bachelor and doctoral education and improving the quality of technical and master education.