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On the Spatial Allocation of College Seats: Human Capital Production and the Distribution of Skilled Labor

Yang, Yu (Alan) (2024): On the Spatial Allocation of College Seats: Human Capital Production and the Distribution of Skilled Labor.

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How to allocate college seats across regions is an important yet largely neglected issue. It may imply a policy tradeoff between efficiency in aggregate human capital production and equality of opportunities for people growing up in different places. Furthermore, the flow of college attendance, resulting from the geography of college seats, also impacts the spatial distribution of skilled workers through post-college migration and regional inequality in future development. This paper studies this tradeoff between efficiency and multidimensional inequality in the spatial allocation of college seats by focusing on the province-based college admission quotas in China, the largest college market in the world. Combining national administrative data and surveys, I estimate a structural model of college and migration choice under quota constraints, together with a measurement model that can recover the nationally comparable distribution of pre-college human capital in each province. There are substantial skill gaps between college applicants across provinces, but this disparity is not well reflected in the allocated admission quotas. A purely merit-based nationwide admission increases aggregate human capital at the cost of worse college opportunities and substantially more severe brain drain in less developed regions, while equalized admission leads to the opposite outcome. Comparing the current quota system against the efficiency-equality frontier suggests that China places a larger policy weight toward a more equalized spatial supply of skilled labor.

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