Long-term effect of trade liberalization on human capital: evidence from Chinese students

Jintao Fu

China Economic Journal, 2024, vol. 17, issue 3, 461-480

Abstract: This study examines the long-term effects of trade liberalization on human capital accumulation for students, specifically through schooling decisions. To establish this linkage, I leverage the significant reduction in trade tariffs following China’s WTO accession in 2001 as an identification strategy and construct the shift-share instrument variable for each Chinese prefecture’s exposure to trade shock. Utilizing cognitive test scores from the China Family Panel Studies (CFPS) dataset for cohorts aged between 13 to 20 at the time of trade liberalization, I find that the trade shock leads to a decline in cognitive test scores approximately 15 years later. Furthermore, combining CFPS data with the China Population Census, I demonstrate that export expansion has resulted in a reduction in university enrollment and less education years among youth.

Date: 2024
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DOI: 10.1080/17538963.2024.2375479

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