Education and Innovation: The Long Shadow of the Cultural Revolution
The Cultural Revolution deprived Chinese students of the opportunity to receive higher education for 10 years when colleges and universities were closed from 1966-1976. We examine the human capital cost of this loss of education on subsequent innovation by firms, and ask if it impacted firms more than 30 years later. We examine the innovation of firms with CEOs who turned 18 during the Cultural Revolution, which sharply reduced their chances of attending college. Using multiple approaches to control for selection and endogeneity, including an instrument based on whether the CEO turned 18 during the Cultural Revolution and a regression discontinuity approach, we show that Chinese firms led by CEOs without a college degree spend less on R&D, generate fewer patents, and receive fewer citations to these patents.
We appreciate the helpful suggestions from seminar participants at Southern University of Science and Technology, Development Economics Workshop at Peking University, The Ronald Coase Institute Workshop on Institutional Analysis in University of Warsaw (2019), 12th International Accounting & Finance Doctoral Symposium in Milan (2019), Asian Meeting of the Econometric Society (2019), China Financial Research Conference (2019), Ph.D. Poster Session at the AFA Annual Meeting (2020). The authors are responsible for all the remaining errors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- A decade of upheaval that brought traditional education to a standstill birthed a cohort of Chinese CEOs less inclined to spend on R&...