Abstract
Abstract This study explores the long-lasting influence of political violence on household savings using the Cultural Revolution in China as a quasi-experimental setting. By employing a difference-in-difference strategy, I find that for cohorts in their childhood and adolescence during the Cultural Revolution, a 1-standard-deviation increase in political violence is associated with about 0.1-standard-deviation higher savings rates nowadays. Other potential confounders before, during, and after the Cultural Revolution do not fully explain the positive relationship. I also find that political violence could influence future savings through its effect on factors internal to the individual, but that external factors do not play a role. Finally, I identify that persistence is lower in regions with nowadays higher economic openness and a better rule of law.
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