Globalization and Investment in Human Capital

Abstract

Workers are becoming increasingly concerned about the impact that globalization has on their domestic labor market. While existing research typically focuses on the e¤ects on labor market outcomes such as wages and employment, we examine whether American workers respond to globalization by increasing their investment in human capital. Speci…cally, we measure the extent to which o¤shoring and immigration a¤ect enrollment at institutions of higher education. The results indicate that both o¤shoring and immigration increase enrollment at community colleges, particularly among older students. We conclude that workers in the U.S. are responding to o¤shoring and immigration by acquiring the skills necessary to compete in a global economy.Keywords: globalization, higher education, enrollment, o¤shoring, immigration JEL Codes: F16, I2, J24

The Effect of Local Labor Market Downturns on Postsecondary Enrollment and Program Choice

“…Betts and McFarland (1995) find that unemployment rate increases of 1 percentage point lead to enrollment increases of 4 percentage points, and recent work uses similar designs (Nutting 2008;Clark 2011;Hillman and Orians 2013). 3 Additionally, recent evidence shows that enrollment in the two-year and four-year sectors increased considerably because of the Great Recession (Barrow and Davis 2012), and enrollment in community colleges is particularly sensitive to labor demand changes due to globalization and offshoring (Hickman and Olney 2011). However, there is much less evidence on whether the content of what people study is affected by downturns.…”

A simple model of globalization, schooling and skill acquisition

“…Hickman and Olney (2011) provide direct evidence that the offshoring of local production, and international migration into local labor markets, both induce U.S. workers to enroll in post-secondary education institutions. Atkin (2012) provides empirical evidence that young Mexican workers respond to increased export opportunities for low-skill occupations by reducing their enrollment in school, whereas greater export opportunities for 2 Fang (2006) uses a structural model to quantify the relative importance of signaling motives and productivity enhancement in explaining the college wage premium in the US and finds that both motives contribute substantially to educational incentives.…”

The impacts of trade liberalization on the local labor market: Older women are especially vulnerable

“…The educational composition change between men and women might lead to gender disparities in labor market outcomes. For instance, China trade shocks induce an increasing investment in human capital, if more men than women return to school for retraining, this difference in human capital investment may widen the gender gap (Hickman & Olney, 2011). I explore this possibility by examining the impact of China trade shocks on various subpopulation changes.…”