Trade, Internal Migration, and Human Capital : Who Gains from India’s IT Boom?
How do trade shocks affect welfare and inequality when human capital is endogenous? Using an external information technology demand shock and detailed internal migration data from India, this paper first documents that both information technology e...
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/565441627412473697/Trade-Internal-Migration-and-Human-Capital-Who-Gains-from-India-s-IT-Boom http://hdl.handle.net/10986/36038 |
| Summary: | How do trade shocks affect welfare and
inequality when human capital is endogenous? Using an
external information technology demand shock and detailed
internal migration data from India, this paper first
documents that both information technology employment and
engineering enrollment responded to the rise in information
technology exports. Information technology employment
responded more when nearby regions had a higher share of
college-age population. The paper then develops a
quantitative spatial equilibrium model featuring two new
channels: higher education choice and differential costs of
migrating for college and work. The framework is used to
quantify the aggregate and distributional effects of the
information technology boom and perform counterfactuals.
Without endogenous education, the estimated aggregate
welfare gain from the export shock would have been about a
third as large and regional inequality twice as large.
Reducing barriers to mobility for education, such as
reducing in-state quotas for students at higher education
institutes, would substantially reduce inequality in the
gains from the information technology boom across districts. |
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