Commodity exports and educational inequality

ABSTRACT

This paper studies the impact of commodity exports on educational inequality. Using data from 33 Latin America and the Caribbean countries over the period 1965 to 2010, the empirical analysis shows that export expansion of commodities leads to higher levels of educational inequality. The results are shown to be robust to the consideration of many control variables, different measures of commodity exports, and endogeneity of export expansion in commodities. Given the importance of educational inequality for economic growth, our results suggest a potential role for policy intervention in balancing the trade-off between promoting the aggregation production of education and increasing export growth in low-skill sectors.

KEYWORDS:

• Commodity exports
• export expansion
• human capital
• educational inequality

JEL CLASSIFICATION:

• F16
• J24
• O12

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ There is a large and growing literature investigates the effects of international trade on human capital formation (see, Atkin 2016; Blanchard and Olney 2017; Li 2018).

² We provide empirical evidence in Appendix Table A2. The educational attainment data are drawn from the Barro-Lee educational attainment dataset (Barro and Lee, 2013). Our results show that the effect of commodity exports on educational attainment is negative, statistically significant, and economically meaningful at all levels of education (except for primary schooling enrolment). These findings suggest that export expansion in commodities discourages young people from enrolling in secondary/tertiary schooling and increases the dropout rate of those in primary/secondary/tertiary schooling.

³ In addition, recent studies such as Atkin (2016) and Blanchard and Olney (2017) argue that gender matters in response to the labour market condition shocks. They find strong evidence that males are more responsive to low-skill intensive export shocks than females. Therefore, from the gender perspective, export expansion in commodities could increase educational inequality.

⁴ https://www.merit.unu.edudocsginipublicexcel.xls.

⁵ EduGini measures the ratio to the mean of half of the average schooling deviations between all possible pair of people. The EduGini equation is constructed as the following.

$EduGini=(\frac{1}{\mu })\sum _{i=2}^n\sum _{j=1}^{i-1}{s}_i|y_i-y_j|s_j$ (1)

where $EduGini$ is the Gini coefficient of education based on educational attainment distribution, $\mu$ is the average years of schooling for the concerned population, $s_i$ and $s_j$ stand for the shares of population with certain levels of schooling, $y_i$ and $y_j$ are the years of schooling at different educational attainment levels, $n$ is the number of levels of attainment and equals to seven. Note that the seven categories include no schooling, total primary schooling, completed primary schooling, total secondary schooling, completed secondary schooling, total tertiary schooling and completed tertiary schooling.

⁶ Income inequality is measured by Gini coefficients of disposable household per capital income, poverty ratio is the percentage of the population living on less than $1.90 a day at 2011 international prices.

⁷ Recall that the standard deviation of commodity exports is 25.0 in the LAC region.

⁸ Another robustness check, we adopt a more extended lag structure in Appendix Table A1 to address one-year lag structure could be too short to capture the effect of commodity exports on educational inequality. The results remain to show that export expansion in commodity exports has exacerbated the educational inequality in the LAC region in the period 1965–2010.

⁹ The data on the commodity exports are obtained from the World Development Indicators and Penn World Table 10.0. We then match these weights with international commodity prices provided by UNCTAD (2013). The commodities here are broadly categorized, namely, agricultural materials, ores, metals, and food.