Doctoral Dissertation Defense

PROGRAM | Economics

By: Yuhan Chen Chair: Olga Gorbachev

ABSTRACT

This dissertation focuses on the impacts of technological and educational policies on household financial behaviors in China. My first chapter uses the 2013 Internet Finance Revolution as an exogenous policy shock to study the impact of high-speed Internet access on households’ consumption and financial asset allocation in China. Using a continuous DID method, it is found that close to a fiber optic network significantly increases the proportion of risky financial assets held by households. Moreover, the fiber optic network may influence household investment via the financial inclusion channel. In terms of heterogeneity, internet access has a more significant effect on the proportion of risky financial assets held by households in urban areas, well-developed regions, old age groups, high-income groups, and better-educated households in China.

My second chapter uses compulsory education reform as an exogenous policy shock to study the impact of education on households’ financial asset allocation in China. It has been found that compulsory education reform increases household heads’ educational attainment and their willingness to participate in financial asset markets. It also decreases the probability of owning investment properties. I find evidence of educational heterogeneity by gender as well as birthplace. However, the effect of reform has no gender and regional differences in financial asset market participation.

My third chapter studies the direct impact of the 1986 compulsory education reform on people’s educational attainment in China. Using the reform as a quasi-experiment, I estimate the reform’s effect through the combination of pre-existing location variation in program intensity and cohort exposure based on the timing of the reform. Using hand-collected data from the 1983 county-level population census, I demonstrate that increased exposure to reform resulted in a 1.83-year improvement in children’s educational achievement. By adopting the local projection method, I found that the reform has a persistent and continuously increasing impact on individuals’ educational attainment.

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