China’s Lost Generation: Changes in Beliefs and their Intergenerational Transmission

Beliefs about whether effort pays off govern some of the most fundamental choices individual make. This paper exploit the “lost generation” during China’s Cultural Revolution to understand how these beliefs can be affected, how they are transmitted across generations, how they affect behaviors. During the Cultural Revolution, China’s college admission system based on entrance exams was suspended between 1966 and 1976, effectively depriving an entire cohort of young people of the opportunity to access higher education. Using data from a nationally representative survey, we employ a pseudo-RD design to compare cohorts who graduated from high school just before and after the college entrance exam was resumed. We find that the “lost generation” who missed out on college believes much less that effort pays off, even 40 years afterwards. However, they transmit less of such changed beliefs to the next generation, and invest more in their children’s education. *Roland: University of California, Berkeley, CEPR and NBER. Email: [email protected]. Yang: Stanford University. Email: [email protected]. We thank Ran Abramitzky, Arun Chandrasekhar, Hongbin Li, and Mark Rosenzweig, and seminar participants at Stanford for helpful conversations and comments.