Working Paper: NBER ID: w27107
Authors: Zhangkai Huang; Gordon M. Phillips; Jialun Yang; Yi Zhang
Abstract: The Cultural Revolution deprived Chinese students of the opportunity to receive higher education for 10 years when colleges and universities were closed from 1966-1976. We examine the human capital cost of this loss of education on subsequent innovation by firms, and ask if it impacted firms more than 30 years later. We examine the innovation of firms with CEOs who turned 18 during the Cultural Revolution, which sharply reduced their chances of attending college. Using multiple approaches to control for selection and endogeneity, including an instrument based on whether the CEO turned 18 during the Cultural Revolution and a regression discontinuity approach, we show that Chinese firms led by CEOs without a college degree spend less on R&D, generate fewer patents, and receive fewer citations to these patents.
Keywords: Cultural Revolution; Human Capital; Innovation; CEO Education
JEL Codes: G31; I23; J24; O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CEO education (M12) | R&D expenditures (O32) |
| CEO education (M12) | patent applications (O34) |
| CEO education (M12) | patent citations (O34) |
| CEO education (M12) | firm innovation (L26) |
| Cultural Revolution (P39) | CEO education (M12) |
| CEO education (turning 18 before/after 1977) (M12) | innovation metrics (O35) |