Seminar Series: Abstract

2.00
May 12 2009
Seminar Room B (Arndt Room)

Trade Costs and Skill Accumulation In China: Causes and International Effects
Peter Robertson, University of New South Wales

(Paper by Richard G Harris, Simon Fraser University, Peter E Robertson, University of New South Wales, and Jessica Y Xu, University of New South Wales) --- In the last decade and China’s growth rate has accelerated and trade flows and education investments have soared. We use calibrated trade model, which features endogenous capital and skill accumulation, to analyse the steady state implications of Chinese economic growth on trade patterns, and incomes in China and the USA. We find that the implied falls in trade costs generate large gains for the USA and large changes in the composition of USA output, but little effect on wage inequality in the USA. We also show that falling trade costs in China can account for more than half of the observed growth in tertiary enrolments in China over the last decade. Despite concerns over the international effects of China’s education boom however are shown to be small.