Abstract: Based on the endogenous economic growth model and the reality of human capital mismatch in China, this paper constructs a benchmark model with human capital redundancy in the public sector and an extended model that corrects the human capital mismatch. Through the comparative analysis of the simulation results, it shows that the economic effect of correcting the mismatch of human capital is very significant. The steady-state economic growth, the steady-state interest rate, the fiscal expenditure efficiency and the overall economic welfare will be significantly improved, while the R&D costs of manufacturers will be significantly reduced. The conclusions of the study suggest balancing the differences in employment attractiveness between public institutions and enterprises, strengthening the positive external characteristics of human capital in public institutions, and increasing the availability of resources and achievements in scientific research and education. By correcting the mismatch in human capital in China, it will alleviate the difficulties in China's fiscal balance, help realize innovation-driven transformation, and promote long-term stable economic growth.