Three essays on human capital in China

This dissertation consists of three chapters on human capital in China. Chapter 1 studies the relationship between prenatal exposure to air pollution and youth cognitive skill development in China. It finds that early exposure to air pollution in utero has a significant detrimental impact on youth cognitive skill development. The effect of prenatal health shock on human capital becomes more apparent as the child ages. The early health shock also has a more significant impact than late shocks on human capital outcomes since early shocks accumulate through time. Prenatal exposure to air pollution also adversely affects youth health, weight, and height in later childhood. The findings provide additional evidence supporting the fetal origins hypothesis, which predicts early shocks in utero affect outcomes later in life. Chapter 2 focuses on the impact of the Cultural Revolution (1966 to 1976) on life-cycle earnings. The Cultural Revolution significantly lowered educational attainment, education quality and accumulated work experience for affected cohorts. Because of reduced education quantity and quality, the affected cohort earned a 12 percent less income than the youngest generation in 1995. Four percent of this twelve percent was caused by shortened education. The adverse effect on returns to human capital diminishes over time, but the losses due to smaller accumulations of human capital persist. The affected generations were further disadvantaged by being more likely to be laid off during the reform of state-owned enterprises in the late 1990s. Chapter 3 examines the impact of three government policies on Chinese food production. Three events fundamentally changed modern Chinese economic history: the Great Leap Forward (1958~1961), the Cultural Revolution (1966~1976) and economic reform initiated in 1978. We apply the Caselli and Coleman (2006) framework to explore the dynamics of labor efficiency of grain production from 1952 to 2008. We apply non-linear least squares estimation allowing for imperfect substitution between low- and high-skill labor to approximate the production function for grains. This framework allows for endogenous choices of labor efficiency in response to a changing technological frontier. This study finds an enormous loss in technical frontier and labor efficiency after the Great Leap Forward. The technical frontier and labor efficiency only had a modest gain during the Cultural Revolution, and some provinces did not recover until the household-responsibility system was introduced after the rural economic reforms in 1978. There is a skill-biased technical change that favors skilled labor more than unskilled labor, but the skill-biased productivity gains were suppressed before the 1978 reforms