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International Trade and the Accumulation of Human Capital
Author(s) -
Owen Ann L.
Publication year - 1999
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.1999.tb00224.x
Subject(s) - human capital , economics , incentive , affect (linguistics) , developing country , capital (architecture) , monetary economics , international economics , market economy , economic growth , linguistics , philosophy , archaeology , history
Changes in the terms of trade affect both the incentives and the ability of individuals to purchase education in a credit‐constrained economy. A model is developed that shows how individual decision‐making is affected in a small economy when it opens up to trade. Empirical results indicate that credit constraints are an important factor influencing school enrollment rates, particularly in low income countries. As a result, countries with low human capital stocks tend to increase their accumulation of human capital with increased trade. The response in high income countries is more muted.