Does Human Capital Spillover Persist? Evidence from the Forced Migration by China’s Send-down Policy

Abstract

This paper tries to estimate the long-term effects of a temporary human capital shock, induced by a forced migration policy in Chinese history. From 1962 to 1979, the Chinese government forcefully relocated 17.92 million high school graduates from cities to rural villages, which was known as the Send-down policy. The immigration of educated youths increased the human capital stock in rural areas. However, this human capital shock retreated in the early 1980s, when most educated youths returned to cities after the policy ended. With a new county-level dataset of the educated youth immigration, we estimate the effects of the Send-down policy on the rural areas’ human capital formation in the long-term. To account for the non-random placement of educated youths, we control for some pre-existing conditions for rural counties in our OLS estimation. Also, we exploit the variation within the pairs of contiguous counties. The benchmark estimates suggest that by 2010, one additional percentage of educated youths in the rural population increased the rural county’s junior high school attainment rate by 0.33 percentage point. It also raised the senior high school attainment rate by 0.44 percentage point and college attainment rate by 0.35 percentage point. Our findings imply that a temporary human capital gain can persistently spillover in the long-term.

 Zhixian Lin

 Ph.D. Student, Department of Economics, UC Davis

Lin graduated from Peking University in 2014. His research interests include Economic History, Development Economics and Applied Microeconomics.

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