The long shadows of war in China: Battle shocks in early life and health/wealth accumulation

Abstract

This paper investigates the long-term effects of the 2nd Sino-Japanese war (1937–1945) and the later Chinese Civil War (1946–1950) on health and wealth outcomes of 45+ elder individuals in China. We find that exposure to the battle shock significantly reduces later adult health outcome such as lung function. Moreover, the later wealth accumulation is also affected negatively. According to our conservative estimates, exposure to battle shock(s) would reduce the lung capability by approximately 5% compared to the population mean and the wealth level by approximately 21% compared to the non-shocked groups. Exploiting the exogenous imposition of wealth equality during the 1950–1978 communism experiment in China, we argue it is the health accumulation channel which inherited the negative battle shocks rather than the wealth accumulation channel. We investigate quantitatively which health-model ingredients can replicate the lifecycle health/wealth dynamics of such early life shocks.