Working Paper: CEPR ID: DP6678
Authors: Oded Galor; Andrew Mountford
Abstract: This research argues that the differential effect of international trade on the demand for human capital across countries has been a major determinant of the distribution of income and population across the globe. In developed countries the gains from trade have been directed towards investment in education and growth in income per capita, whereas a significant portion of these gains in less developed economies have been channelled towards population growth. Cross-country regressions establish that indeed trade has positive effects on fertility and negative effects on education in non-OECD economies, while inducing fertility decline and human capital formation in OECD economies.
Keywords: demographic transition; growth; human capital; international trade
JEL Codes: F11; F43; J10; N30; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade share in GDP per capita (F62) | Fertility in non-OECD economies (J19) |
| Trade share in GDP per capita (F62) | Education in non-OECD economies (I25) |
| Trade share in GDP per capita (F62) | Fertility in OECD economies (J19) |
| Trade share in GDP per capita (F62) | Education in OECD economies (I21) |