Abstract:
This paper aims to examine the causal effec of parental education on children's education. Parents and their children share many common characteristics which are often unobserved --- this causes the omitted-variable bias. To eliminate this bias, we use school interruption during the Chinese Cultural Revolution (CR) as an instrument. The Chinese Cultural Revolution (1966-1976) significantly interrupted one generation's education, but has had no direct effect on the next generation. The empirical results suggest that in urban China, a one year decrease in parent's schooling because of school interruption during the CR leads to a 0.27-0.38 year decrease in the child's schooling; if a parent did not obtain a university degree because of school interruption during the CR, the child is 35-53 percent less likely to obtain a university degree. The results also suggest that maternal education may have a greater influence on children's education than paternal education. Overall, for the particular group whose education was changed by the CR, this paper confirms a significant and sizable causal effect on their children's education.