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College Expansion, Trade and Innovation: Evidence from China

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  • Ma, Xiao

Abstract

This paper examines how China’s expansion of college education since 1999 affects innovation and exports’ skill content. I develop a two-country spatial equilibrium model, featuring skill intensity differences across industries and heterogeneous firms’ innovation and exporting choices. I empirically validate my model mechanisms about how the college expansion affects innovation and exports, exploiting differential supply shocks of college-educated workers across regions due to historical college endowments. I apply the resulting reduced-form estimates in the calibration to discipline key elasticities that determine the magnitude of export expansion. Under different assumptions about firm entry, I find that China’s college expansion explained 40–70% of increases in China’s manufacturing R&D intensity between 2003–2018 and triggered export skill upgrading. I also find that trade openness amplified the impact of this education policy change on China’s innovation and production.

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  • Ma, Xiao, 2020. "College Expansion, Trade and Innovation: Evidence from China," MPRA Paper 109469, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109469
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    Cited by:

    1. David Autor & David Dorn & Gordon Hanson, 2021. "On the Persistence of the China Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(2 (Fall)), pages 381-476.

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    More about this item

    Keywords

    College Expansion; Trade; Innovation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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