Effect of Investment in Human Capital and Physical Capital on Output Level and Economic Growth

The investment on human capital of 31 provinces,municipalities and autonomous regions from 1978 to 2008 was estimated.On the basis of the estimation and with the expanded MRW model,the paper investigates the effect of the investment in physical capital and human capital on real output per capita and economic growth in China.The findings show that physical capital and human capital investment has been playing a significant role in promoting real output per capita and economic growth.The output share of physical capital investment is larger than that of human capital investment,and the contribution rate of human capital investment is smaller than that of human capital investment.