Educated workers and firms' exporting behavior: The case of China

Abstract

This article investigates the effect of China's college expansion policy on firms' exporting behavior. Taking advantage of this policy‐induced exogenous surge in skilled labor starting in 2002, our difference‐in‐differences estimates indicate that firms in more human‐capital‐intensive industries have been able to export more since 2002. We further show that this result is robust to a battery of sensitivity tests and controlling for other contemporaneous changes in economic environment. Turning to channels, we find that after 2002, the affected firms experienced greater improvements in product quality and exported relatively more to richer countries.