The Reverse-Flow of Human Capital and Reindustrialization

DOI: https://doi.org/10.62517/jel.202614504

Author(s)

Shangao Li, Qiuju Chen*, Yi Song

Affiliation(s)

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

Abstract

This paper constructs a two-sector model including manufacturing and services, and studies the influence of cross-sector forward-flow and reverse-flow of human capital on economic structure change, deindustrialization and reindustrialization. The two sectors accumulate human capital independently, while human capital migrates between sectors. This paper analyzes the condition of human capital reverse-flow in equilibrium. The conclusion is that the forward-flow of human capital from manufacturing to services will lead to the decline of the share of manufacturing output and the accelerated increase of the share of services output, which will lead to the trend of deindustrialization; whereas the reverse-flow of human capital from services to manufacturing will lead to the revival of the share of manufacturing output and the decelerated increase of the share of services output, which will lead to the trend of reindustrialization. The forward-flow and reverse-flow of human capital is the fundamental reason for the trend of deindustrialization and reindustrialization.

Keywords

Human Capital; Forward-Flow; Reverse-Flow; Deindustrialization; Reindus-Trialization

References

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