Work

Skill-biased imports, skill acquisition, and migration

Year: 2025

Type: article

Abstract: Imported capital goods, which embody skill-complementary technologies, can increase the supply of skills in developing countries. Focusing on China and using a shift-share design, we show that city-level capital goods import growth increases the local skill share and that both skill acquisition and migration play a role. We develop and quantify a spatial equilibrium model with these two mechanisms to examine the aggregate effects of capital goods imports, accounting for trade and migration linkages between cities. Counterfactual experiments suggest that the growth in capital goods imports in China between 2000 and 2010 led to a 3.1–7.3 million increase in the stock of college graduates, representing 4.4–10.4% of the total increase over this period, with the increase disproportionately occurring in coastal regions. These endogenous skill supply responses reduce by half the increase in the aggregate skill premium due to capital goods imports.

Source: Journal of International Economics

DOI: 10.1016/j.jinteco.2025.104128

Authors: Jingting Fan, Lei Li

Institutions: Cheung Kong Graduate School of Business, University of Göttingen

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $4,300