The Human Capital Legacy of State-Led Industrialization: Long-Term Impacts of China's 156 Projects
Abstract
This paper examines the long-term effects of early-life exposure to large-scale industrialization on adult health, economic outcomes, and well-being. Leveraging the spatial and temporal variation in China’s Soviet-aided 156 Projects, a cornerstone of the First Five-Year Plan from 1953 to 1957, we link city-level industrial investment during 1950 to 1961 to individual outcomes in the China Health and Retirement Longitudinal Study. Focusing on exposure during ages 6 to 12, a critical window for human capital formation, we find that individuals in project cities enjoy significantly better later-life outcomes. They exhibit fewer limitations in activities of daily living, higher cognitive performance, 5 to 7 percent higher total income, and substantially greater private pension income, consistent with improved access to formal-sector employment. City-level analyses confirm that project cities experienced earlier expansion of education infrastructure, though effects on health facilities and aggregate GDP were modest. Our results reveal a positive net legacy of state-led industrialization, operating through enhanced childhood living standards and labor market opportunities. By studying a beneficial economic shock during childhood, this paper complements the literature on early-life adversity and provides new evidence on the human capital returns to historical industrial policy in a major developing economy.
