Does the skill composition of trade drive educational attainment? A cross-country panel analysis

In this paper, we examine how trade affects educational attainment using a novel, time-varying measure of the education intensity of exports and imports in a cross-country panel setting. Our approach captures heterogeneity in skill content both across and within industries and over time, while accounting for country and year fixed effects. We also explore the mediating role of capital intensity. To motivate the analysis, we develop a stylized model that illustrates how shifts in factor prices and capital-skill complementarity shape the relationship between trade composition and education. Empirically, we find that growth in education-intensive exports raises, and growth in education-intensive imports lowers, average years of schooling. However, the positive export effect disappears once we control for capital intensity, while the negative import effect remains strong. These patterns hold across a range of robustness checks, including alternative education intensity measures from 15 countries and various sample restrictions.