Abstract: This paper analyzed the effect of labor market segmentation on human capital investment and its return using Chinese provincial labor market segmentation data and Chinese General Social Survey(CGSS)data. The results showed that:(1)labor market segmentation will significantly reduce human capital investment;(2)labor market segmentation will improve the return of human capital when human capital is low, while it will reduce the return of human capital when human capital is high;(3)market segmentation will significantly improve the return of human capital of female and rural workers rather than male and urban workers. The policy enlightenment of this paper is that although the "one size fits all" market segmentation policy can improve the income of lower-skilled workers, while it is at the expense of poorer allocation efficiency of higher-skilled workers. How to protect lower-skilled workers and improve the mobility of higher-skilled workers is what policymakers need to consider. Meanwhile, it will reduce human capital investment which is not helpful to improving workers' income and social status from a long-term perspective. Encouraging workers' free movement and human capital promotion can fundamentally improve workers' income.