Devaki Ghose (Dartmouth Visiting PhD Student) will present:

"Trade and the Changing Pattern of Human Capital Specialization: Evidence from the Indian IT Boom"

at 12:15pm on Tuesday, November 20, 2018 in (051 Buchanan) Volanakis - TUCK

Lunch will be served at noon.

If you will be attending the Lunch Seminar and have not already done so, please RSVP to Galen Muskat at TUCK so he can order the appropriate amount of food.

ABSTRACT:

 How does incorporating the endogenous human capital supply response to trade change the welfare gains from trade across regions? This paper presents a new quantitative spatial equilibrium framework to analyze this question in the context of the Indian Information Technology (IT) boom.  I incorporate worker field of education and location choice in an economic geography model where typically worker skill levels are given.  I find that incorporating this mechanism significantly increases aggregate welfare and reduces regional inequality in the welfare gains from trade compared to a benchmark model with fixed skill types. The connection between sectors of production and fields of education is that each sector differs in its demand for workers with particular college degrees and thus the option value of education varies by field and location of degree. This mechanism also underscores the importance of regional education policies, such as reducing quotas for in-state students, which reduces the regional inequality in gains from trade and increases aggregate welfare by lowering the costs of migration.