Picking Up the Losses: The Impact of the Cultural Revolution on Human Capital Reinvestment in Urban China

Abstract

This paper uses the Cultural Revolution in China as a quasi-experiment to analyze the long-term impact of interrupted education during an economic transition with many opportunities that reward educational qualifications. We focus on the remedial human capital investment decisions taken by individuals whose education was interrupted by the Cultural Revolution. We find substantial increases in schooling levels among the adult cohorts as they invest in continuous education to compensate for their interrupted schooling and to take advantage of new opportunities afforded by the economic transition. The initial lower level of education caused by the institutional shock can be largely remedied.