Globalization and Investment in Human Capital

Abstract

The authors examine the impact of globalization on the domestic labor market for low-skilled workers. Whereas existing research typically focuses on the effects on labor market outcomes such as wages and employment, the authors of this paper examine whether American workers respond to globalization by increasing their investment in human capital. Using both Census data and the Integrated Postsecondary Education Data System (IPEDS) for the period 2000–2007, they measure the extent to which offshoring and immigration affect enrollment at institutions of higher education. Results indicate that both offshoring and immigration increase enrollment at community colleges but not other types of institutions, particularly among older, non-traditional age students. The authors conclude that U.S. workers are indeed responding to globalization by acquiring the skills necessary to compete in a global economy.