Endogenous skill-biased technology adoption: Evidence from China's college enrollment expansion program

Shuaizhang Feng () and Xiaoyu Xia ()
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Shuaizhang Feng: Jinan University
Xiaoyu Xia: Chinese University of Hong Kong

No 2018-099, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: China's college expansion program, which was implemented in 1999 significantly increased the share of college-educated workers in the urban labor force. We find that returns to education were not responsive to changes in local skill supply be- tween then and 2009. To explain the trend, we develop a model of endogenous technology adoption and predict that increasing the share of college-educated work- ers leads firms to adjust their use of production technology. We construct supply shocks in local labor markets based on policy-driven variations in the changes of college enrollment quotas across cities. Using panel data from over 20,000 large manufacturing firms, we find that an enlarged college-educated labor force causes skill-intensive firms to invest more in capital and R&D as well as employ more workers, evidence that supports the theory of endogenous technology adoption.

Keywords: human capital; endogenous technology adoption; college education; Chinese economy (search for similar items in EconPapers)
JEL-codes: I26 I28 J24 O32 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-cna, nep-lma and nep-tra
Note: MIP
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Citations: View citations in EconPapers (2)

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