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The Shattered “Iron Rice Bowl†— Intergenerational Effects of Economic Insecurity During Chinese State-Owned Enterprise Reform

Author

Listed:
  • Nancy Kong

    (The Centre for the Business of Economics of Health, The University of Queensland)

  • Lars Osberg

    (Department of Economics, Dalhousie University)

  • Weina Zhou

    (Department of Economics, Dalhousie University)

Abstract

Reform of the Chinese state-owned enterprise (SOE) sector in the late 1990s produced massive layoffs (34 million employees) and marked the end of the “iron rice bowl†guarantee of employment security. An expanding international literature has documented the adverse health impacts of economic insecurity on adults but has usually neglected children. This paper uses the natural experiment of SOE reform in China to explore the causal relationship between increased parental economic insecurity and children’s BMI Z-score. Using provincial and year-level layoff rates and income loss from the layoffs, we estimate a generalized differences-in-differences model with individual fixed effects and year fixed effects. For a medium-built 10-year-old boy, a 10%-point increase in expected parental economic loss from layoff (largest treatment effect) implies a gain of 4 kg. The counterfactual analysis suggests a 4.5%-point increase in overweight rate due to the reform. The weight gain persists for boys whose parents kept their jobs, indicating the importance of anxiety about potential losses, as well as the experience of actual loss. Quantile regressions suggest that boys who were relatively overweight were more severely affected by parental economic insecurity. Girls are not significantly affected. Accounting for intergenerational effects therefore increases the estimated public health costs of greater economic insecurity.

Suggested Citation

  • Nancy Kong & Lars Osberg & Weina Zhou, 2018. "The Shattered “Iron Rice Bowl†— Intergenerational Effects of Economic Insecurity During Chinese State-Owned Enterprise Reform," Discussion Papers Series 595, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uq2004:595
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    File URL: http://www.uq.edu.au/economics/abstract/595.pdf
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    References listed on IDEAS

    as
    1. Liu, Hong & Zhao, Zhong, 2014. "Parental job loss and children's health: Ten years after the massive layoff of the SOEs' workers in China," China Economic Review, Elsevier, vol. 31(C), pages 303-319.
    2. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 809-827, November.
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    4. Zhou, Weina, 2014. "Brothers, household financial markets and savings rate in China," Journal of Development Economics, Elsevier, vol. 111(C), pages 34-47.
    5. Nicholas Rohde & KK Tang & Lars Osberg, 2017. "The self-reinforcing dynamics of economic insecurity and obesity," Applied Economics, Taylor & Francis Journals, vol. 49(17), pages 1668-1678, April.
    6. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
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    More about this item

    Keywords

    Economic Insecurity; Health; Intergenerational Effects; BMI;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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