Do IT service centers promote school enrollment? Evidence from India

Globalization has changed job opportunities in much of the developing world. In India, outsourcing has created a new class of high-skill jobs which have increased overall returns to schooling. Existing evidence suggests education may broadly respond to this change. We use microdata to evaluate the impact of these jobs on local school enrollment in areas outside of major IT centers. We merge panel data on school enrollment from a comprehensive school-level administrative dataset with detailed data on Information Technology Enabled Services (ITES) center location and founding dates. Using school fixed effects, we find that introducing a new ITES center causes a 5% increase in the number of children enrolled in primary school; this effect is localized to within a few kilometers. We show the effect is driven by English-language schools, consistent with the claim that the impacts are due to changes in returns to schooling, and is not driven by changes in population or income resulting from the ITES center. Supplementary survey evidence suggests that the localization of the effects is driven by limited information diffusion.