In recent years, a large number of highly skilled workers have poured into the public sector and non-productive monopoly state-owned enterprises represented by financial institutions, resulting in a high concentration of human capital in these sectors. On the contrary, the physical sector represented by manufacturing industry has a talent shortage. This mismatch of human capital deserves special attention, especially in the critical period of China’s economic transformation from high-speed growth to high-quality development. To achieve the goal of building a powerful manufacturing country and advanced manufacturing industry, innovation is required, and talent strategy is fundamental. The existing studies are mainly carried out from the perspectives of labor remuneration and industrial monopoly, but there is one fact that cannot be explained: On the one hand, with the deepening of reform, the wage formulation of public sectors and state-owned enterprises is becoming more and more market-oriented, and monopoly and power rent-seeking are also gradually weakened; on the other hand, the labor occupation choice is biased towards these sectors, resulting in the increasingly serious problem of human capital mismatch.
This paper concerns that the debt expansion of local governments based on land finance may be an important reason for the above problems. First, the model is used to prove that the debt expansion of local governments will expand the scale of public sectors and financial industry, and attract labor force through direct and indirect effects. Due to the existence of “entry threshold” in these sectors and the failure of compensation system marketization, the “siphon” effect of these sectors on highly skilled labor force has led to the mismatch of human capital with physical sectors. Second, using the data of China Family Panel Studies (CFPS) and dividing local government debt into explicit and implicit categories, it is found that with the debt expansion of local governments, the highly skilled labor force is more inclined to public sectors and financial industry in terms of the occupation choice, and will form a wage gap compared with physical sectors, resulting in human capital mismatch. Classifying all the industry into public sectors, state-owned enterprises and private enterprises, it is found that with the acceleration of the debt expansion of local governments, more skilled labor will be attracted to public sectors and state-owned enterprises, resulting in excess human capital. Further research also finds that the improvement of regional marketization can effectively curb the above effects. This conclusion, to some extent, explains the reason why the current occupation choice of labor force tends to public sectors, which provides new evidence for regulating and controlling local government debt, and expands the solution to the problem of human capital mismatch from different angles.