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The Human Capital Legacy of a Trade Embargo

Author

Listed:
  • Abhishek Chakravarty
  • Matthias Parey
  • Greg C. Wright

Abstract

We estimate the effects of in-utero exposure to a trade embargo on survival and human capital in an import-dependent developing country. Using a sharp regression discontinuity design, we show that a nearly comprehensive embargo imposed by India on Nepal in 1989 led to a close to 30 percent decrease in reported live births the month after it began. Adult survivors of exposure have more education and earn 30% higher monthly income compared to unexposed cohorts. The regional variation in post-embargo income is consistent with a model that combines internal and external trade costs with non-homothetic preferences.

Suggested Citation

  • Abhishek Chakravarty & Matthias Parey & Greg C. Wright, 2017. "The Human Capital Legacy of a Trade Embargo," 2017 Papers pch906, Job Market Papers.
  • Handle: RePEc:jmp:jm2017:pch906
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    References listed on IDEAS

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    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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