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Schooling supply and the structure of production: Evidence from US States 1950-1990
Ciccone, Antonio; Peri, Giovanni
Universitat Pompeu Fabra. Departament d'Economia i Empresa
We find that over the period 1950-1990, US states absorbed increases in the supplyof schooling due to tighter compulsory schooling and child labor laws mostly throughwithin-industry increases in the schooling intensity of production. Shifts in the industrycomposition towards more schooling-intensive industries played a less important role.To try and understand this finding theoretically, we consider a free trade model withtwo goods/industries, two skill types, and many regions that produce a fixed rangeof differentiated varieties of the same goods. We find that a calibrated version ofthe model can account for shifts in schooling supply being mostly absorbed throughwithin-industry increases in the schooling intensity of production even if the elasticityof substitution between varieties is substantially higher than estimates in the literature.
Macroeconomics and International Economics
schooling supply
within-industry absorption
industry composition
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