Seminar Vol. 160

Title: The Interaction Between Environment and Endowment: Evidence from a Social Experiment on Twins

Speaker: Rufei Guo, Wuhan University

Time: May 23rd, 2019 10:00–11:30

Venue: Conference Room 106B, Zhonghui Building (IESR, JNU College of Economics)

About the speaker:

Rufei Guo is an Associate Research Professor at the Economics and Management School, and Vice Chair for Research at the Department of World Economy, Wuhan University. His main research interests are in Labor and Development Economics, and Applied Microeconometrics, with his work published in such international journals as Journal of Comparative Economics, and Annals of Economics and Finance. He received a Ph.D. in Economics from the Chinese University of Hong Kong in 2017. 

Abstract:

Does endowment moderate the effect of environmental adversities? This question has profound implications for income inequality, but few studies provide a clean identification of the endowment-environment interaction. We explore a social experiment, i.e., China's send-down campaign, and birthweight differences in genetically identical twins to obtain exogenous variations in environment and endowment, respectively. The send-down campaign forced millions of Chinese urban youths to do hard agriculture work in rural areas during China's cultural revolution. We find that the send-down experience strengthens a child with a higher endowment relative to the one with a lower endowment. If the higher endowed male was sent down to the countryside, he earns a higher wage, receives more wedding gifts from his parents, and marries a better educated wife than his brother does. If the higher endowed female was sent down, she obtains more schooling years and is heathier than her sister does. Intra-household allocation drives the results for males but not for females. Our findings imply that adverse environmental shocks tend to enlarge income inequality.