Title: Defensive Innovation: Technological Rivalry and College Major Choice

Speaker: Lei Li, The University of Göttingen

Time: 2025/03/06 10:00-11:30

Venue: 106 Zhonghui Building

Abstract

This paper studies the responses of students’ college major choices to trade tensions in the context of the U.S.-China trade war. By analyzing granular college admission data, we find that the U.S. tariffs targeting China’s high-tech industries have unexpectedly raised admission scores for STEM majors. A 1% increase in export tariff exposure results in a 2-3% rise in standardized admission scores for school-major combinations, particularly in engineering disciplines and elite universities. This “defensive innovation” phenomenon is driven by firms’ increased investments and stronger government support in affected industries, leading to greater demand for high-skilled workers. As U.S. tariffs rise, firms receive more subsidies and offer higher wages for R&D occupations, incentivizing students to pursue areas critical to China’s technological progress.