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Remember the name: Persistence of wealth through China’s revolutions

via MR

Source: The Economist

Can efforts to eradicate inequality in wealth and education eliminate intergenerational persistence of socioeconomic status? Or would the rich and powerful be able to recreate their advantage in an environment where wealth and access to education have been thoroughly reshuffled?

In this paper, we investigate these questions in the context of two major revolutions that occurred back to back in China — the Communist Revolution in the 1950s and the Cultural Revolution from 1966 to 1976. These revolutions represent one of the most extreme attempts in human history to eliminate the advantages of the elite, to eradicate inequality in wealth and education, and to erase cultural differences in the population, especially between the rich and the poor.

The revolutions aimed to shut down two critical channels of intergenerational transmission: transmission through income and wealth (e.g., inheritance) and transmission through formal human capital accumulation (e.g., schooling). Specifically, during the Communist Revolution and the subsequent Cultural Revolution, land assets were expropriated from the rich and redistributed to the poor, secondary schools and universities were closed throughout the country, and the values associated with being educated and being rich were heavily stigmatized.

… we trace the socioeconomic conditions of the pre-revolution elite and their descendants, and show that Huang’s family story represents a more general pattern across China: despite extraordinary repression, the descendants of the pre-revolution economic elite are significantly better off today than the descendants of the pre-revolution poor.

We show this by following three generations in rural China: the “grandparents,” i.e., the generation that grew up before the revolutions, thus roughly individuals born before 1940; the “parents,” i.e., the generation that grew up during the Communist and Cultural Revolutions — those born between, say, 1940 and 1965, — who experienced shocks such as the expropriation (or redistribution) of land and school closure; and the “children” — the third generation, — who were teenagers by the time the Communist and Cultural Revolutions had ended, secondary schools and universities had reopened, and China had started to implement the reforms that would enable private asset accumulation and private enterprises again.

Alberto F. Alesina, Marlon Seror, David Y. Yang, Yang You, and Weihong Zeng – Persistence through Revolutions

Full Paper at NBER; Economist article, paywalled and not.

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