The Chinese Inland-Coastal Inequality: The Role of Human Capital and the 2007–2008 Crisis Watershed

Abstract

We investigate the role of human capital (HC) in the Chinese inland-coastal inequality and, related to this, how the consequences of the 2007–2008 crisis may induce China to re-focus its development path on HC. We compare panel data analyses for two periods (1998–2008 and 2009–2017) for two diverging groups of provinces (the richer/coastal and the relatively poor/inland areas). In the first period, the economic strengths that influenced the Chinese take-off and the dualism are confirmed. However, the results show that an evolution in local economic endowments is taking place: first, HC has a more evident economic effect after the crisis only in the inland provinces; second, the development path of the inland area is changing, with an evolution towards more productive sectors which can favor higher returns to HC.