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International trade and the accumulation of human capital

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  • Ann L. Owen

Abstract

Changes in the terms of trade affect both the incentives and the ability of individuals to purchase education in a credit‐constrained economy. A model is developed that shows how individual decision‐making is affected in a small economy when it opens up to trade. Empirical results indicate that credit constraints are an important factor influencing school enrollment rates, particularly in low income countries. As a result, countries with low human capital stocks tend to increase their accumulation of human capital with increased trade. The response in high income countries is more muted.
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  • Ann L. Owen, 1995. "International trade and the accumulation of human capital," Finance and Economics Discussion Series 95-49, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:95-49
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    Human capital; International trade;

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