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The Composition of Exports and Human Capital Acquisition

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This paper investigates whether the composition of a country's exports affects educational attainment. A simple model shows how trade affects the relative wages of skilled and unskilled labor which in turn changes the incentives to go to school. These predictions are tested using data spanning forty years and over a hundred countries. The results confirm that exporting unskill-intensive goods depresses average years of schooling, while exporting skill-intensive goods increases years of schooling. Endogeneity is address by using bilateral trade data and the gravity model to identify variation in exports that is unrelated to domestic factors. The results provide insight into which types of exports are most beneficial for human capital formation and how trade can exacerbate initial differences in factor endowments across countries.

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File URL: http://web.williams.edu/Economics/wp/OlneyExportsandEducation.pdf
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Paper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2013-18.

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Length: 43 pages
Date of creation: Nov 2013
Date of revision: Sep 2013
Handle: RePEc:wil:wileco:2013-18

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Keywords: Exports; Education; Human Capital;

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  1. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
  2. Wood, Adrian & Ridao-Cano, Cristobal, 1999. "Skill, Trade, and International Inequality," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 89-119, January.
  3. Daniel C. Hickman & William W. Olney, 2011. "Globalization and Investment in Human Capital," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(4), pages 654-672, July.
  4. Claustre Bajona & Timothy Kehoe, 2010. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 487-513, July.
  5. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
  6. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-78, December.
  7. Vogel, Jonathan, 2007. "Institutions and moral hazard in open economies," Journal of International Economics, Elsevier, vol. 71(2), pages 495-514, April.
  8. Redding, Stephen J & Schott, Peter, 2003. "Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?," CEPR Discussion Papers 3739, C.E.P.R. Discussion Papers.
  9. Oded Galor & Andrew Mountford, 2008. "Trading Population for Productivity: Theory and Evidence," Working Papers 2008-2, Brown University, Department of Economics.
  10. Emily Blanchard & Gerald Willmann, 2013. "Trade, Education, and The Shrinking Middle Class," Kiel Working Papers 1831, Kiel Institute for the World Economy.
  11. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  12. James Feyrer, 2009. "Trade and Income -- Exploiting Time Series in Geography," NBER Working Papers 14910, National Bureau of Economic Research, Inc.
  13. Ventura, Jaume, 1997. "Growth and Interdependence," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 57-84, February.
  14. David Atkin, 2012. "Endogenous Skill Acquisition and Export Manufacturing in Mexico," NBER Working Papers 18266, National Bureau of Economic Research, Inc.
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