STICERD Work in Progress Seminars
Does Adversity Breed Thriftiness and Diligence? The Long-Run Effects of China's Send-down Movement
Yi Fan (Department of International Development, LSE)
Friday 21 February 2014 13:00 - 14:00
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About this event
During China’s Cultural Revolution (1966-1978), 17 million urban youths, mostly junior or senior high school graduates, were sent to countryside for farm work with an average of 3-4 years. Using data from the Chinese Household Income Project and Twins data in 2002, I estimate the long-run effects of the send-down movement (rustication program) on housing consumption, income, working time, insurance and borrowing behavior. I show that the adverse rustication experience is associated with increasing thriftiness and diligence. Rusticated individuals consume less on housing though have no significant decrease in income. They also work for longer time, purchase more insurance, and are less likely to borrow from family or friends (in contrast to banks or financial institutions) in emergency. The results are robust under various sensitivity analyses and hold when considering the spillover and nationwide effects with census data. Taken together, my results suggest that the adverse experience of rustication has significant explanatory power for later economic outcome and consuming behaviors.