How does globalization affect educational attainment? Evidence from China

Abstract

I examine the effect of China’s integration into the world economy on high school education in Chinese prefectures between 1991 and 2005. I focus on the reduction in trade policy uncertainty faced by Chinese exporters in the U.S., and use Bartik-style local treatment measures in a difference-in-differences empirical framework. I find increases in high school education were attenuated in prefectures facing larger reductions in U.S. tariff uncertainty on unskilled-labor intensive goods — this result is driven by an increased opportunity cost of schooling due to the arrival of low-skill jobs upon the elimination of trade policy uncertainty with the U.S.