Can Regional Trade Agreements Negatively Impact Primary Schooling?

Abstract

Using a differences-in-differences approach we study the link between regional trade agreements (RTAs) and completion of primary education in developing countries and find that the causal link is negative and economically significant. Engaging in RTAs between 1980 and 2016 decreases primary education completion rate by approximately 0.757 percentage points. Our findings are robust to the inclusion of both falsification and placebo tests. More importantly, when applying event studies, we find that the equal trends assumption holds. We explain our findings as the likely result of increased opportunity costs in households whose adult members tend to be unskilled and relatively poor, as they have higher incentives of having their children work either outside or inside their households.