Intergenerational Effects of Chinese SOE Reform on Educational Inequality

• In Event: Social Mobility and Education across the Globe

Abstract

Reform of the Chinese state-owned enterprise (SOE) sector in the mid 1990s caused massive layoffs (xiagang) of around 34 million employees which marked the end of “iron rice bowl” guarantee of job security for the remaining workers, and the adverse impact of this shock on their children are mostly neglected in the existing literature. The research project aims to fill this research gap by investigating the intergenerational effects of parents’ experience of unemployment triggered by the large-scale SOE reform on their children’s educational attainment. This study employs the research method of natural experiment which assesses outcomes and impact of certain policy interventions to conduct the difference-in-differences (DID) analysis. Drawing data from the China Health and Retirement Longitudinal Survey (CHARLS) in 2014 and 2020, this study examines the effects of parents’ exposure to economic insecurity caused by SOE mass layoffs on their children’s educational attainment. The findings of this study reveal the long-term intergenerational impact of the historical urban labor market reform in the last century on unequal educational resource allocation which hinders social mobility and perpetuates social inequalities in China nowadays. Our study suggests that not only people who experienced the time of great economic and employment uncertainty had their life disrupted but their children’s socioeconomic statuses are indirectly affected. Since China’s SOE reform is still unfinished, this study has significant policy implications to consider the impact of macroeconomic policy implementations on the unforeseen social equity issues at the micro level for the next generation.

Authors

• Danning Zhao, The Chinese University of Hong Kong, Shenzhen

• Lin Song, The Chinese University of Hong Kong, Shenzhen

• Kuo Lin, The Chinese University of Hong Kong, Shenzhen