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

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Abstract

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.

Suggested Citation

  • Emily Blanchard & William W. Olney, 2013. "Globalization and Human Capital Investment: How Export Composition Drives Educational Attainment," Department of Economics Working Papers 2013-18, Department of Economics, Williams College, revised Mar 2015.
    • Handle: RePEc:wil:wileco:2013-18
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    File URL: https://web.williams.edu/Economics/wp/OlneyExportsandEducation.pdf
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    Keywords

    Exports; Education; Human Capital; Structural Change;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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