Higher education expansion and domestic value added in exports: Theory and evidence from China

Yan Du, Jie Yan, Fangzhou Cao, Yifei Li and Mao Zhou

Journal of Asian Economics, 2023, vol. 87, issue C

Abstract: This paper analyzes the impact of China’s higher education expansion on domestic value added in exports. To be specific, we firstly construct a nested CES production function model, with import inputs being complementary to skilled labors, and substitutable to unskilled labors. By exploiting China’s higher education expansion as a quasi-natural experiment, this paper accurately examines the causal effect of the human capital expansion on the domestic value-added in exports. The results show that human capital expansion has negative effects on the domestic value-added in exports, and this result is driven by import inputs increase and processing trade engagement. We also find that the effect is more prominent for processing trade, foreign-invested firms, high-tech firms and disciplines of science and engineering.

Keywords: Human capital; Higher education expansion; Domestic value-added rate (search for similar items in EconPapers)
JEL-codes: F14 F16 I25 J24 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:87:y:2023:i:c:s1049007823000416

DOI: 10.1016/j.asieco.2023.101621

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