IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v244y2025ics0047272725000325.html

Poverty spillovers in human capital Formation: Evidence from randomized class assignments in China

Author

Listed:
  • Huang, Wei
  • Luo, Mi
  • Song, Yueping
  • Wang, Yiping
  • Wu, Hantao

Abstract

This paper investigates the spillover effects of peer poverty on student outcomes using data from a nationally representative, randomly assigned sample of junior high school classes in China. We find that higher classroom poverty rates significantly reduce students’ academic performance, non-cognitive skills, and the likelihood of high school and college enrollment. These effects are particularly pronounced among students from lower-income families, while the presence of wealthier peers provides yields little benefit. Mechanisms driving these outcomes include diminished student motivation, poorer classroom climates, reduced parental involvement, and lower teacher attention. Our findings provide new evidence on the impact of peer socio-economic status on student achievement and long-term educational trajectories.

Suggested Citation

  • Huang, Wei & Luo, Mi & Song, Yueping & Wang, Yiping & Wu, Hantao, 2025. "Poverty spillovers in human capital Formation: Evidence from randomized class assignments in China," Journal of Public Economics, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:pubeco:v:244:y:2025:i:c:s0047272725000325
    DOI: 10.1016/j.jpubeco.2025.105334
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272725000325
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2025.105334?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Joshua D. Angrist & Parag A. Pathak & Christopher R. Walters, 2013. "Explaining Charter School Effectiveness," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 1-27, October.
    2. repec:pri:rpdevs:deaton_price_indexes_inequality_and_the_measurement_of_world_poverty_aer. is not listed on IDEAS
    3. Raj Chetty & Nathaniel Hendren, 2018. "The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1163-1228.
    4. Francesco Agostinelli & Matthias Doepke & Giuseppe Sorrenti & Fabrizio Zilibotti, 2026. "It Takes a Village: The Economics of Parenting with Neighborhood and Peer Effects," Journal of Political Economy, University of Chicago Press, vol. 134(1), pages 313-365.
    5. Marianne Bertrand & Jessica Pan, 2013. "The Trouble with Boys: Social Influences and the Gender Gap in Disruptive Behavior," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 32-64, January.
    6. Goldman, Matt & Kaplan, David M., 2018. "Comparing distributions by multiple testing across quantiles or CDF values," Journal of Econometrics, Elsevier, vol. 206(1), pages 143-166.
    7. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    8. Jonah B. Gelbach, 2016. "When Do Covariates Matter? And Which Ones, and How Much?," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 509-543.
    9. Raj Chetty & Nathaniel Hendren, 2018. "The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1107-1162.
    10. Jens Ludwig & Greg J. Duncan & Lisa A. Gennetian & Lawrence F. Katz & Ronald C. Kessler & Jeffrey R. Kling & Lisa Sanbonmatsu, 2013. "Long-Term Neighborhood Effects on Low-Income Families: Evidence from Moving to Opportunity," American Economic Review, American Economic Association, vol. 103(3), pages 226-231, May.
    11. Frank Schilbach & Heather Schofield & Sendhil Mullainathan, 2016. "The Psychological Lives of the Poor," American Economic Review, American Economic Association, vol. 106(5), pages 435-440, May.
    12. Eric Chyn & Lawrence F. Katz, 2021. "Neighborhoods Matter: Assessing the Evidence for Place Effects," Journal of Economic Perspectives, American Economic Association, vol. 35(4), pages 197-222, Fall.
    13. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(4), pages 1593-1660.
    14. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    15. Victor Lavy & Edith Sand, 2019. "The Effect of Social Networks on Students' Academic and Non-cognitive Behavioural Outcomes: Evidence from Conditional Random Assignment of Friends in School," The Economic Journal, Royal Economic Society, vol. 129(617), pages 439-480.
    16. Ludger Woessmann, 2016. "The Importance of School Systems: Evidence from International Differences in Student Achievement," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 3-32, Summer.
    17. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers I: Evaluating Bias in Teacher Value-Added Estimates," American Economic Review, American Economic Association, vol. 104(9), pages 2593-2632, September.
    18. Joshua D. Angrist & Kevin Lang, 2004. "Does School Integration Generate Peer Effects? Evidence from Boston's Metco Program," American Economic Review, American Economic Association, vol. 94(5), pages 1613-1634, December.
    19. Sean F. Reardon & Kendra Bischoff & Ann Owens & Joseph B. Townsend, 2018. "Has Income Segregation Really Increased? Bias and Bias Correction in Sample-Based Segregation Estimates," Demography, Springer;Population Association of America (PAA), vol. 55(6), pages 2129-2160, December.
    20. Scott E. Carrell & Mark L. Hoekstra, 2010. "Externalities in the Classroom: How Children Exposed to Domestic Violence Affect Everyone's Kids," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 211-228, January.
    21. Eric A. Hanushek & Ludger Woessmann, 2020. "A quantitative look at the economic impact of the European Union’s educational goals," Education Economics, Taylor & Francis Journals, vol. 28(3), pages 225-244, May.
    22. Huang, Wei & Li, Teng & Pan, Yinghao & Ren, Jinyang, 2023. "Teacher characteristics and student performance: Evidence from random teacher-student assignments in China," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 747-781.
    23. Scott E. Carrell & Bruce I. Sacerdote & James E. West, 2013. "From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation," Econometrica, Econometric Society, vol. 81(3), pages 855-882, May.
    24. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    25. Di Xu & Qing Zhang & Xuehan Zhou, 2022. "The Impact of Low-Ability Peers on Cognitive and Noncognitive Outcomes: Random Assignment Evidence on the Effects and Operating Channels," Journal of Human Resources, University of Wisconsin Press, vol. 57(2), pages 555-596.
    26. van Praag, Bernard M S & Spit, Jan S & van de Stadt, Huib, 1982. "A Comparison between the Food Ratio Poverty Line and the Leyden Poverty Line," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 691-694, November.
    27. Guo, Juncong & Qu, Xi, 2022. "Competition in household human capital investments: Strength, motivations and consequences," Journal of Development Economics, Elsevier, vol. 158(C).
    28. Esteban Aucejo & Patrick Coate & Jane Cooley Fruehwirth & Sean Kelly & Zachary Mozenter, 2022. "Teacher Effectiveness and Classroom Composition: Understanding Match Effects in the Classroom," The Economic Journal, Royal Economic Society, vol. 132(648), pages 3047-3064.
    29. Angus Deaton, 2010. "Price Indexes, Inequality, and the Measurement of World Poverty," American Economic Review, American Economic Association, vol. 100(1), pages 5-34, March.
    30. Durlauf, Steven N, 1996. "A Theory of Persistent Income Inequality," Journal of Economic Growth, Springer, vol. 1(1), pages 75-93, March.
    31. Petra Todd & Kenneth I. Wolpin, 2018. "Accounting for Mathematics Performance of High School Students in Mexico: Estimating a Coordination Game in the Classroom," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2608-2650.
    32. Lawrence F. Katz & Jeffrey R. Kling & Jeffrey B. Liebman, 2001. "Moving to Opportunity in Boston: Early Results of a Randomized Mobility Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 607-654.
    33. Jean-William Laliberté, 2021. "Long-Term Contextual Effects in Education: Schools and Neighborhoods," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 336-377, May.
    34. Jan Feld & Ulf Zölitz, 2017. "Understanding Peer Effects: On the Nature, Estimation, and Channels of Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 35(2), pages 387-428.
    35. Murnane, Richard J & Maynard, Rebecca A & Ohls, James C, 1981. "Home Resources and Children's Achievement," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 369-377, August.
    36. Josh Kinsler & Ronni Pavan, 2021. "Local Distortions in Parental Beliefs over Child Skill," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 81-100.
    37. Angrist, Joshua D., 2014. "The perils of peer effects," Labour Economics, Elsevier, vol. 30(C), pages 98-108.
    38. Gallego, Francisco A. & Malamud, Ofer & Pop-Eleches, Cristian, 2020. "Parental monitoring and children's internet use: The role of information, control, and cues," Journal of Public Economics, Elsevier, vol. 188(C).
    39. Sheetal Sekhri, 2020. "Prestige Matters: Wage Premium and Value Addition in Elite Colleges," American Economic Journal: Applied Economics, American Economic Association, vol. 12(3), pages 207-225, July.
    40. Bryan S. Graham, 2018. "Identifying and Estimating Neighborhood Effects," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 450-500, June.
    41. Jonathan Guryan & Kory Kroft & Matthew J. Notowidigdo, 2009. "Peer Effects in the Workplace: Evidence from Random Groupings in Professional Golf Tournaments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 34-68, October.
    42. Caroline Hoxby, 2000. "Peer Effects in the Classroom: Learning from Gender and Race Variation," NBER Working Papers 7867, National Bureau of Economic Research, Inc.
    43. Adam S. Booij & Edwin Leuven & Hessel Oosterbeek, 2017. "Ability Peer Effects in University: Evidence from a Randomized Experiment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 547-578.
    44. Nathan Deutscher, 2020. "Place, Peers, and the Teenage Years: Long-Run Neighborhood Effects in Australia," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 220-249, April.
    45. Eisenberg, Daniel & Golberstein, Ezra & Whitlock, Janis L., 2014. "Peer effects on risky behaviors: New evidence from college roommate assignments," Journal of Health Economics, Elsevier, vol. 33(C), pages 126-138.
    46. Scott E. Carrell & Mark Hoekstra & Elira Kuka, 2018. "The Long-Run Effects of Disruptive Peers," American Economic Review, American Economic Association, vol. 108(11), pages 3377-3415, November.
    47. Jie Gong & Yi Lu & Hong Song, 2018. "The Effect of Teacher Gender on Students’ Academic and Noncognitive Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 743-778.
    48. Raj Chetty & Nathaniel Hendren & Lawrence F. Katz, 2016. "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment," American Economic Review, American Economic Association, vol. 106(4), pages 855-902, April.
    49. Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
    50. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    51. Hannum, Emily & Wang, Meiyan, 2006. "Geography and educational inequality in China," China Economic Review, Elsevier, vol. 17(3), pages 253-265.
    52. Olugbenga Ajilore, 2015. "Identifying peer effects using spatial analysis: the role of peers on risky sexual behavior," Review of Economics of the Household, Springer, vol. 13(3), pages 635-652, September.
    53. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    54. Daniel Aaronson & Lisa Barrow & William Sander, 2007. "Teachers and Student Achievement in the Chicago Public High Schools," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 95-135.
    55. Orazio Attanasio & Costas Meghir & Emily Nix, 2020. "Human Capital Development and Parental Investment in India," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(6), pages 2511-2541.
    56. Thomas S. Dee, 2007. "Teachers and the Gender Gaps in Student Achievement," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
    57. James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-2086, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ai, Hongshan & Tan, Xiaoqing, 2025. "The impact of exposure to pipeline gas connection during pregnancy on child development: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 133(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Wei & Li, Teng & Pan, Yinghao & Ren, Jinyang, 2023. "Teacher characteristics and student performance: Evidence from random teacher-student assignments in China," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 747-781.
    2. Matthew A Lenard & Mikko Silliman, 2025. "Informal social interactions, academic achievement and behavior: Evidence from peers on the school bus," The Economic Journal, Royal Economic Society, vol. 135(671), pages 2359-2373.
    3. Bobby W. Chung & Jian Zou, 2023. "Understanding spillover of peer parental education: Randomization evidence and mechanisms," Economic Inquiry, Western Economic Association International, vol. 61(3), pages 496-522, July.
    4. Alexandra de Gendre & Nicolás Salamanca, 2020. "On the Mechanisms of Ability Peer Effects," Melbourne Institute Working Paper Series wp2020n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Fletcher, Jason M. & Ross, Stephen L. & Zhang, Yuxiu, 2020. "The consequences of friendships: Evidence on the effect of social relationships in school on academic achievement," Journal of Urban Economics, Elsevier, vol. 116(C).
    6. Cai, Xiqian & Cheng, Zhengquan & Jiao, Yang, 2025. "Skewed aspirations: The impact of economic inequality within the classroom on students’ academic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 237(C).
    7. Megalokonomou, Rigissa & Zhang, Yi, 2024. "How good am I? Effects and mechanisms behind salient rank," European Economic Review, Elsevier, vol. 170(C).
    8. Megalokonomou, Rigissa & Zhang, Yi, 2022. "How Good Am I? Effects and Mechanisms behind Salient Ranks," IZA Discussion Papers 15604, IZA Network @ LISER.
    9. Weina Zhou & Andrew J. Hill, 2023. "The spillover effects of parental verbal conflict on classmates' cognitive and noncognitive outcomes," Economic Inquiry, Western Economic Association International, vol. 61(2), pages 342-363, April.
    10. Dinarte Diaz,Lelys Ileana, 2020. "Peer Effects on Violence : Experimental Evidence from El Salvador," Policy Research Working Paper Series 9187, The World Bank.
    11. Rigissa Megalokonomou & Yi Zhang, 2023. "How Good Am I? Effects and Mechanisms Behind Salient Rank," Monash Economics Working Papers 2023-07, Monash University, Department of Economics.
    12. Luo, Yiyang & Yang, Songtao, 2023. "Gender peer effects on students’ educational and occupational expectations," China Economic Review, Elsevier, vol. 77(C).
    13. Zhang, Haifeng & Zang, Lijun & Mao, Mingzhi & Guo, Jiqiang & Wang, Chunchao, 2023. "The externalities of preschool attendees in middle school classes," China Economic Review, Elsevier, vol. 77(C).
    14. Daniel Borbely & Jonathan Norris & Agnese Romiti, 2023. "Peer Gender and Schooling: Evidence from Ethiopia," Journal of Human Capital, University of Chicago Press, vol. 17(2), pages 207-249.
    15. Chung, Bobby W., 2020. "Peers’ parents and educational attainment: The exposure effect," Labour Economics, Elsevier, vol. 64(C).
    16. Simone Balestra & Aurélien Sallin & Stefan C. Wolter, 2023. "High-Ability Influencers? The Heterogeneous Effects of Gifted Classmates," Journal of Human Resources, University of Wisconsin Press, vol. 58(2), pages 633-665.
    17. Zou, Jian, 2024. "The peer effect of persistence on student achievement," Economics of Education Review, Elsevier, vol. 102(C).
    18. Bin Huang & Rong Zhu, 2020. "Peer effects of low-ability students in the classroom: evidence from China’s middle schools," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(4), pages 1343-1380, October.
    19. repec:osf:socarx:hyau2_v1 is not listed on IDEAS
    20. Shure, Nikki, 2021. "Non-cognitive peer effects in secondary education," Labour Economics, Elsevier, vol. 73(C).
    21. Andersland, Leroy, 2017. "Peer Effects from a School Choice Reform," Working Papers in Economics 9/17, University of Bergen, Department of Economics.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:244:y:2025:i:c:s0047272725000325. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.