Abstract
This paper provides a micro-analysis of the long-term impacts of a particular historical event: the Cultural Revolution in urban labor market of China. Using the life-cycle models and synthetic cohort approach, I demonstrate that the Cultural Revolution produced a lasting negative effect on permanent income for the subjected birth cohorts and this effect was amplified from the middle 1990s to the early 2000s as the Chinese market economy increasingly evolved. Channels in the mechanism of the impact includes productivity determinants (educational attainment, work experience, and health), marriage, and personality. The conclusions are robust to a variety of controls for family background as well as contamination factors, examinations with various control groups, contemporaneous comparisons, and placebo tests.
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