Globalization and Human Capital Investment: How Export Composition Drives Educational Attainment

This paper demonstrates that the composition of a country's exports is an important driver of educational attainment. Using detailed trade data and a gravity-based IV technique, we identify the causal impact of changes in the pattern of a country's exports on subsequent educational attainment. Relying on within-country variation over forty-five years for more than one hundred countries, our empirical analysis shows that exports of low-skill-intensive goods depresses average years of schooling - particularly at the primary level - while exports of skill-intensive goods increases years of schooling - at higher rungs of the educational ladder. Our results provide new insights into which types of sectoral growth are most beneficial for long-term human capital formation and suggest that trade can exacerbate initial differences in factor endowments across countries.