Educational resources are generally distributed unevenly across space. Within an individual’s lifespan, the decision regarding education ranks among the most crucial, determining whether to pursue higher education and where to pursue it. In this paper, we develop a dynamic spatial model to endogenize the educational decision, allowing individuals to migrate within a country in search of either work or educational opportunities. Our quantitative model mirrors China’s economy, addressing the policy question of the government’s investment in higher education institutes. We estimate the cost of obtaining education in each location and simulate college expansion. Counterfactual exercises demonstrate that the unevenly distributed resources largely suppress talents in less education resource-abundant places, leading to a 3% lower skill ratio compared to otherwise equally distributed resources.
