College Expansion, Trade and Innovation: Evidence from China

Xiao Ma

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines how China’s expansion of college education since 1999 affects innovation and exports’ skill content. I develop a two-country spatial equilibrium model, featuring skill intensity differences across industries and heterogeneous firms’ innovation and exporting choices. I empirically validate my model mechanisms about how the college expansion affects innovation and exports, exploiting differential supply shocks of college-educated workers across regions due to historical college endowments. I apply the resulting reduced-form estimates in the calibration to discipline key elasticities that determine the magnitude of export expansion. Under different assumptions about firm entry, I find that China’s college expansion explained 40–70% of increases in China’s manufacturing R&D intensity between 2003–2018 and triggered export skill upgrading. I also find that trade openness amplified the impact of this education policy change on China’s innovation and production.

Keywords: College Expansion; Trade; Innovation (search for similar items in EconPapers)
JEL-codes: F16 I25 O32 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-cna, nep-int and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/112260/8/MPRA_paper_112260.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109469

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