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When Opportunity Knocks: China's Open Door Policy and Declining Educational Attainment

Author

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  • Jiang, Xuan
  • Kennedy, Kendall
  • Zhong, Jiatong

Abstract

At the end of 1978, China opened the door to trade with foreign businesses. This study investigates how the Open Door Policy's implementation affected the skill composition and skill premium for workers born 1960-1970. Using measures of local labor markets' export exposure, we find that for every $1000 increase in exports per worker, high school completion rates decreased by 4.5 p.p. for workers born in 1970, compared to those born in 1960. Linking this to mid-career outcomes in 2010, we show that highly export-exposed workers in China have a $124 greater return to an additional year of schooling than their less export-exposed brethren. This suggests China's growth was likely dampened and its income inequality widened during the early industrialization of the 1980s and 1990s, as the Open Door Policy simultaneously reduced the availability of skilled labor and increased the skill premium.

Suggested Citation

  • Jiang, Xuan & Kennedy, Kendall & Zhong, Jiatong, 2018. "When Opportunity Knocks: China's Open Door Policy and Declining Educational Attainment," MPRA Paper 89649, University Library of Munich, Germany, revised Oct 2018.
  • Handle: RePEc:pra:mprapa:89649
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    File URL: https://mpra.ub.uni-muenchen.de/89649/1/MPRA_paper_89649.pdf
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    References listed on IDEAS

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    1. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    2. Li, Bingjing, 2018. "Export expansion, skill acquisition and industry specialization: evidence from china," Journal of International Economics, Elsevier, vol. 114(C), pages 346-361.
    3. Justin Yifu Lin, 1987. "The Household Responsibility System Reform in China: A Peasant's Institutional Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 410-415.
    4. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, December.
    5. Irene Brambilla & Daniel Lederman & Guido Porto, 2012. "Exports, Export Destinations, and Skills," American Economic Review, American Economic Association, vol. 102(7), pages 3406-3438, December.
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    Cited by:

    1. Xuan Jiang, 2020. "Family Planning And Women'S Educational Attainment: Evidence From The Oneā€Child Policy," Contemporary Economic Policy, Western Economic Association International, vol. 38(3), pages 530-545, July.

    More about this item

    Keywords

    Open Door Policy; educational attainment; high school completion; skill premium;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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