Working Paper: NBER ID: w25318
Authors: Youwei Wang; Yuxin Chen; Yi Qian
Abstract: We use an extensive panel of 17 million individuals born between 1947 and 1995 from China’s largest online marketplace, Taobao, to study the impact of RAE on the propensity to become an entrepreneur. Using events surrounding the Cultural Revolution and the issuance of the Compulsory Education Law whereby COD policies varied, we conceptualize a natural experiment to identify the RAE effects. The youngest students are 5.4% less likely to become an entrepreneur compared to the oldest within the cohort, translating to approximate 43.7 thousand additional sellers born in September with an estimated USD 1.29 billion in additional annual sales.
Keywords: Relative Age Effect; Entrepreneurship; Cultural Revolution; Compulsory Education Law; Natural Experiment
JEL Codes: I24; I38; J21; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Relative Age Effect (RAE) (J26) | Entrepreneurship (M13) |
| Individuals born in September (J19) | Entrepreneurship (M13) |
| Relative Age Effect (RAE) (J26) | Educational Attainment (I21) |
| Educational Attainment (I21) | Entrepreneurship (M13) |
| Relative Age Effect (RAE) (J26) | Leadership Positions (M54) |
| Leadership Positions (M54) | Entrepreneurship (M13) |
| Relative Age Effect (RAE) (J26) | Seller-to-Buyer Ratio (L14) |
| Cultural Revolution (P39) | Relative Age Effect (RAE) (J26) |
| Ethnic Minority Regions (J15) | Relative Age Effect (RAE) significance (J78) |