May 2021
Yao Pan (George Washington University and Aalto University)
Jessica Leight (International Food Policy Research Institute)
Abstract: This paper analyzes the effects of positive shocks to export-oriented industries following China’s accession to the World Trade Organization on human capital investment in urban and rural areas. Exploiting cross-county variations in the reduction in export tariff uncertainty both locally and at plausible migration destinations, we find that youth reaching matriculation age post-accession in counties experiencing a larger export shock show a lower probability of enrolling in high school. In urban areas, this effect is driven by local shocks, while in rural areas, it is primarily driven by shocks at migration destinations. Urban youth show evidence of a deterioration in labor market outcomes linked to declining matriculation rates, while there is no evidence of significant labor market effects for rural youth.
JEL Codes: F14, F16, J24, O15, O18, O19
Key Words: Export Shock, Human Capital Attainment, Urban-rural Inequality, China
