Abstract:

I use a quasi-random urban-dweller allocation in rural areas during Mao’s Mass Rustication Movement to identify human capital externalities in education, employment, and social values. First, rural residents acquired an additional 0.1-0.2 years of education from a 1% increase in the density of sent-down youth measured by the number of sent-down youth in 1969 over the population size in 1982. Second, as economic outcomes, people educated during the rustication period suffered from less non-agricultural employment in 1990. Conversely, in 2000, they enjoyed increased hiring in all non-agricultural occupations and lower unemployment. Third, sent-down youth changed the social values of rural residents who reported higher levels of trust, enhanced subjective well-being, altered trust from traditional Chinese medicine to Western medicine, and shifted job attitudes from objective cognitive assessments to affective job satisfaction. To explore the mechanism, I document that sent-down youth served as rural teachers with two new county-level datasets.