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Globalization and Human Capital Investment: How Export Composition Drives Educational Attainment

This paper demonstrates that the composition of a country's exports is an important driver of educational attainment. Using detailed trade data and a gravity-based IV technique, we identify the causal impact of changes in the pattern of a country's exports on subsequent educational attainment. Relying on within-country variation over forty-five years for more than one hundred countries, our empirical analysis shows that exports of low-skill-intensive goods depresses average years of schooling - particularly at the primary level - while exports of skill-intensive goods increases years of schooling - at higher rungs of the educational ladder. Our results provide new insights into which types of sectoral growth are most beneficial for long-term human capital formation and suggest that trade can exacerbate initial differences in factor endowments across countries.

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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: 54 pages
Date of creation: Nov 2013
Date of revision: Mar 2015
Handle: RePEc:wil:wileco:2013-18
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  1. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers.
  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. David Atkin, 2012. "Endogenous Skill Acquisition and Export Manufacturing in Mexico," NBER Working Papers 18266, National Bureau of Economic Research, Inc.
  4. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
  5. Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," IMF Working Papers 05/127, International Monetary Fund.
  6. 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.
  7. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  8. Stephen Redding & Peter K. Schott, 2003. "Distance, skill deepening and development: will peripheral countries ever get rich?," LSE Research Online Documents on Economics 3703, London School of Economics and Political Science, LSE Library.
  9. James Feyrer, 2009. "Trade and Income -- Exploiting Time Series in Geography," NBER Working Papers 14910, National Bureau of Economic Research, Inc.
  10. Claustre Bajona & Timothy J. Kehoe, 2006. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," NBER Working Papers 12567, National Bureau of Economic Research, Inc.
  11. Galor, Oded & Mountford, Andrew, 2008. "Trading Population for Productivity: Theory and Evidence," CEPR Discussion Papers 6678, C.E.P.R. Discussion Papers.
  12. Carl Davidson & Nicholas Sly, 2013. "A Simple Model of Globalization, Schooling and Skill Acquisition," CESifo Working Paper Series 4394, CESifo Group Munich.
  13. Emily Blanchard & Gerald Willmann, 2013. "Trade, Education, and The Shrinking Middle Class," Kiel Working Papers 1831, Kiel Institute for the World Economy.
  14. 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.
  15. Vogel, Jonathan, 2007. "Institutions and moral hazard in open economies," Journal of International Economics, Elsevier, vol. 71(2), pages 495-514, April.
  16. Jaume Ventura, 1997. "Growth and Interdependence," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 57-84.
  17. Jaume Ventura, 1997. "Growth and Interdependence," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 57-84.
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