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Industrial policy and human capital accumulation of urban children: Evidence from the Third Front Construction in China

Author

Listed:
  • Yu, Weihua
  • Yu, Zengyang

Abstract

This paper examines the impact of the Third Front Construction (TFC), a large-scale industrial policy implemented in China's central and western regions during the 1960s–1970s, on regional human capital accumulation. Exploiting the TFC as a quasi-experiment, we find that the TFC investment significantly increased the educational attainment of urban children, whereas no significant effect is observed for their rural counterparts. Mechanism analysis indicates that, although the TFC expanded local educational resources, the simultaneous growth of labor market opportunities in rural areas may have offset potential educational gains for rural children. Further analysis shows that urban children affected by the TFC were better positioned for high-skilled occupations, and these human capital gains also exhibited intergenerational transmission. Our study highlights the complex trade-off between the short-term economic opportunities generated by industrial policies and the long-term development of human capital.

Suggested Citation

  • Yu, Weihua & Yu, Zengyang, 2026. "Industrial policy and human capital accumulation of urban children: Evidence from the Third Front Construction in China," Economic Modelling, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:ecmode:v:160:y:2026:i:c:s0264999326001197
    DOI: 10.1016/j.econmod.2026.107590
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    Keywords

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    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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