Health Shocks and Children’s School Attainment in Rural China

Health Shocks and Children’s School Attainment in Rural China*

Ang Sun

Graduate student

Department of Economics

Brown University

&

Yang Yao

Professor

China Center for Economic Research

Peking University

Using a long panel dataset of farm households from China covering the period of 1987 to 2002, this paper studies how major health shocks happening in a family affect its children’s school attainment. We find that primary school-age children are the most vulnerable to health shocks. Their chances to enter middle school decrease by 19.4% when a prime-age adult in their families has a major illness. Our robustness tests of using a more homogenous sub-sample, instrumenting the health shocks, estimating a family fixed-effect model, and controlling the sibling effect have found smaller but still statistically and economically significant effects. We have also found weak evidence for the screening effect of health shocks. Policy implications of these findings are briefly discussed.

JEL classification: I2; D1; E2

Keywords: school attainment; health shocks; human capital