The theoretical basis that governments can involve in human capital investment through the public policies is that "market failure" occurs in human capital investing and that governments can set up the supporting system to promote human capital investment through the public policies of providing financing,regulating tax policy and perfecting labour force market,etc.
This paper expounds the connotation of the functional mechanism of human capital,probes into the problems of human capital investment,and analyzes on the environment of functional mechanism of human capital.
Most current theory researches of investment in human capital pay more attention to investment quantity than to investment structure,so this paper analyzes the specific form of the human capital investment structure using education and health as two kinds of capitals.
Through theoretical and empirical analysis, this paper finds out that the key to transformation is to raise the economic value of people, to improve human capital investment and to match the stocks of physical and human capital.
This papers offers an explanation of this fact based on a simple life-cycle model of human capital investment and timing of first birth.
The empirical analysis finds results consistent with the higher wages of late childbearers arising primarily through greater measurable human capital investment.
Implementation of this second-best insurance however distorts the human capital investment decisions when education qualifies for a low risk job.
This paper tests whether interhousehold transfers from children to parents in developing countries are motivated by altruism or intended to be repayments of implicit parental loans taken up by children for human capital investment.