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Political violence and household savings: Evidence from the long-term effects of the Cultural Revolution

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  • Li, Logan

Abstract

This study explores the long-lasting influence of political violence on household savings using the Cultural Revolution in China as a quasi-experimental setting. By employing a difference-in-difference strategy, I find that for cohorts in their childhood and adolescence during the Cultural Revolution, a 1-standard-deviation increase in political violence is associated with about 0.1-standard-deviation higher savings rates nowadays. Other potential confounders before, during, and after the Cultural Revolution do not fully explain the positive relationship. I also find that political violence could influence future savings through its effect on factors internal to the individual, but that external factors do not play a role. Finally, I identify that persistence is lower in regions with nowadays higher economic openness and a better rule of law.

Suggested Citation

  • Li, Logan, 2021. "Political violence and household savings: Evidence from the long-term effects of the Cultural Revolution," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).
    • Handle: RePEc:eee:joecag:v:19:y:2021:i:c:s2212828x21000141
    DOI: 10.1016/j.jeoa.2021.100320
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    Cited by:

    1. Cheng, Zhiming & Tani, Massimiliano & Torgler, Benno, 2023. "Is there hope after despair? An analysis of trust among China's Cultural Revolution survivors," Economic Modelling, Elsevier, vol. 121(C).
    2. Logan (Geng) Li & Zhengwei Wang, 2022. "Understanding the long‐term effects of Keju: The case of entrepreneurship in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(4), pages 665-689, October.

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    More about this item

    Keywords

    Political violence; Household savings; History and economics;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • N95 - Economic History - - Regional and Urban History - - - Asia including Middle East
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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