Employment Gap, Wage Gap and Human Capital Migration

DOI: https://doi.org/10.62517/jbm.202609506

Author(s)

Shangao Li, Qiuju Chen*, Yi Song

Affiliation(s)

School of Management, Qujing Normal University, Qujing, Yunnan, China *Corresponding Author

Abstract

In this study, we construct a dual-sector economic growth model that explicitly incorporates both the commodity-producing sector and the service sector, and we rigorously analyze how cross-sectoral human capital migration shapes sectoral economic disparities. The model yields three central findings. First, human capital accumulation serves as a fundamental engine of steady-state growth: by enhancing labor productivity and fostering innovation capacity, it promotes sustained expansion not only within each individual sector but also at the aggregate economy level, thereby generating a mutually reinforcing dynamic between sectoral development and overall macroeconomic performance. Second, the direction of human capital flows matters critically for sectoral outcomes: the immigration of human capital into the service sector accelerates its output growth by raising skill intensity, improving service quality, and stimulating knowledge-based activities, whereas the emigration of human capital from the commodity sector constrains its growth potential by depleting the skilled workforce, dampening technological adoption, and reducing productive efficiency in goods production. Third, and most importantly, the interplay between human capital accumulation and cross-sectoral migration inevitably widens sectoral economic disparities: as skilled workers gravitate toward the service sector, the resulting divergence in skill endowments amplifies productivity gaps, output per worker differentials, and wage inequalities between the two sectors, creating a cumulative causation mechanism that perpetuates and deepens structural imbalance across the economy. These results underscore the pivotal role of human capital mobility in driving both aggregate prosperity and inter-sectoral inequality.

Keywords

Human Capital Migration; Human Capital Accumulation; Sectoral Economic Disparities; SBGP; ABGP

References

[1] R. E. Lucas Jr. On the Mechanics of Economic Development. Journal of Monetary Economics, 1988, 22(1): 3-42. [2] D. Acemoglu, F.A. Gallego and J.A. Robinson. Institutions, Human Capital, and Development. Annual Review of Economics, 2014, 6(1): 875-912. [3] S. S. Awode and M. O. Oduola. The Interplay between Technological Innovation and Human Capital Development in Driving Industrial Productivity and Competitiveness in Africa. Journal of Economics and Development, 2025, 27(1): 56-72. [4] C. Mabaso and A. Ontong. Advancing Economic Growth through Human Capital Development in the Era of the Fourth Industrial Revolution. SA Journal of Human Resource Management, 2025, 23: 1-15. [5] D. A. Avdeeva. The Contribution of Human Capital to Economic Growth in Russia. Higher School of Economics Economic Journal, 2024, 28(4): 1-22. [6] S. Chen, X. Piao, J. Xie and S. Managi. Human Capital and Regional Disparities: Advancing Accounting Frameworks with Education, Health, and Population Dynamics. PLOS ONE, 2025, 20(2): e0315166. [7] M. Li and W. Gao. Exploring How Human Capital Development Promotes Economic Transformation: The Comparative Analysis of Emerging Economies. Journal of Organizational and End User Computing, 2025, 37(1): 1-20. [8] J. R. Cuadrado-Roura, K. Kourtit and P. Nijkamp. Spatial Disparities, Convergence and Economic Development: A Global and Local Orientation. The Annals of Regional Science, 2025, 74(1): 1-25. [9] A. M. Ungureanu and M. I. P. Silaghi. Sustainable Structural Change through Human Capital Quality: Evidence from EU-OECD Countries. Studia Universitatis Babes-Bolyai, Oeconomica, 2025, 70(1): 1-18. [10] H. Pinto, E. Odoi, C. Nogueira and L. F. C. Viana. Pathways to Progress: Unveiling Structural Change in Africa through Economic Transformation, Technology, Talent, and Tourism. Economies, 2025, 13(1): 21. [11] K. G. Gebrehiwot, A. B. Beyene and W. G. Ejigu. Human Capital and Institutional Quality as Parallel Pathways to Structural Transformation in Sub-Saharan Africa. Discover Sustainability, 2025, 6(1): 1-20. [12] M. Mabrouki. Energy Transition in BRICS Countries: The Role of Human Capital, Structural Transformation, and Institutional Quality: A Panel ARDL Approach. MPRA Paper, No. 126562, 2025. [13] H. Mehlum, R. Torvik and S. Valente. Growth with Age-Dependent Preferences. Journal of International Trade & Economic Development, 2020, 1-12. [14] S. Li, L. Gong and S. Pan. Wage and Price Differences, Technology Gap and Labor Flow Dynamics. Economic Modelling, 2020, 88: 211-222. [15] O. A. Shoband, L. Ogbeifun, et al. Do Structural Transformation and Energy Transition Cause Growth? Review of Development Economics, 2025, 29(4): 2710-2735. [16] D. Comin, D. Lashkari and M. Mestieri. Structural Change with Long-Run Income and Price Effects. Econometrica, 2025, 89(1): 311-374. [17] K. Matsuyama. Engel’s Law in the Global Economy: Demand-Induced Patterns of Structural Change, Innovation and Trade. Econometrica, 2019, 87(2): 497-528. [18] L. Kong, E. Sofuoğlu, B. D. Ishola, S. Abbas, Q. Guo, et al. Sustainable Development through Structural Transformation: A Pathway to Economic, Social, and Environmental Progress. Economic Change and Restructuring, 2024, 57(2): 1-34.