Vocational education investment and middle-income group expansion in China

Qi Chen and Xinghai Li

Finance Research Letters, 2025, vol. 76, issue C

Abstract: This study examines the relationship between vocational education investment and middle-income group expansion in China through the lens of industrial structure transformation. Using panel data from 25 Chinese provinces across six periods, we employ standard regression and threshold effect models to analyze this complex relationship. Findings reveal that vocational education, particularly at the secondary level, significantly contributes to middle-income group expansion. This study proposes a novel dual-threshold paradigm to show that the efficacy of vocational education investment exhibits linear and nonlinear relationships with industrial structure growth. In particular, we determine a positive correlation with non-agricultural sector growth and an inverted U-shaped relationship with industrial structure optimization. These nuanced findings have important implications for educational investment plans in emerging economies undergoing industrial transformations.

Keywords: Vocational education investment; Middle-income group; Industrial structure; Threshold effect (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002892

DOI: 10.1016/j.frl.2025.107025

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