Trade, Internal Migration, and Human Capital: Who Gains from India’s IT Boom?

Abstract How do trade shocks affect welfare and inequality when human capital is endogenous? Using India’s IT boom and internal migration data, I document that IT employment and engineering enrollment increased with exports, especially in regions with larger college-age populations. I develop a spatial model featuring higher education choice and differential migration costs for college versus work. The IT boom increased welfare by 2.39%, but without educational mobility, gains would be 25% lower and regional inequality 1.5 times larger. Removing endogenous education further reduces gains by over one-third. Education policies like national scholarships could substantially reduce regional inequality from trade shocks.