Abstract: There is a large dispersion in college attainment rates across regions in the US. In this paper, I show that local skill composition acts as an information channel by which college age individuals learn about the returns to skill. Using richly detailed individual level panel data I show that the responsiveness of the college attainment decision to the local skill premium varies significantly with the existing share of skilled in the local labor force. This effect persists even when accounting for other channels studied in the literature like school quality. To understand the implications of local learning on the aggregate supply of skill, I present a model of endogenous skill acquisition with uncertainty and learning about the returns to skill from the existing share of skilled in the local labor force. Using this framework, I numerically show how this local learning channel can give rise to persistent dispersion in rates of skill acquisition across regions. Low skill traps arise when initial beliefs are low compared to the actual realization of the high skill wage.
Rules of origin and export quality: The case of Bangladesh
Work in Progress:
Regional exposure to trade shocks: A unifying approach (with Marisol Rodriguez Chatruc)