Regulations in the Era of High‐Quality Development and Human Capital's Divergence: Evidence From China

ABSTRACT Industrial development in Chinese cities has attracted a substantial influx of both high‐ and low‐skilled labourers. However, as the economy transitions toward tertiary industry dominance, population regulations in many mega‐cities exhibit a preference for high‐skilled labourers while constraining the inflow of low‐skilled ones. Using panel data from 288 Chinese cities, this study examines the changes of human capital's divergence and how population regulations and industrial development influence the changes. We present new spatial evidence that sheds light on the reverse changes in the divergence of human capital from 2008 to 2019, which initially decreased and then increased. When population regulations align with the demands of industrial development, they help reduce the divergence in human capital. Conversely, misalignment exacerbates undesired divergence, which fails to meet the regulatory objectives for high‐ and low‐skilled labourers and fails to satisfy the labour demands of industrial development. The findings suggest that future policies should prioritize industrial restructuring over targeted regulations to guide the distribution of labourers.