The Rusted “Iron Rice Bowl”: Intergenerational Effects of Chinese SOE Reform on Educational Inequality

Reform of the Chinese state-owned enterprise (SOE) sector in the mid 1990s caused massive layoffs (xiagang) of around 34 million employees, marking the end of “iron rice bowl” guarantee of job security for the remaining workers. The adverse impact of this shock on their children are mostly neglected in the literature. The research project aims to fill this research gap by investigating the intergenerational effects of parents’ experience of unemployment triggered by the large-scale SOE reform on their children’s educational attainment. This study conducts a cohort difference-in-differences (DID) analysis. Drawing data from the China Health and Retirement Longitudinal Survey, this study examines the effects of parents’ exposure to economic insecurity caused by SOE mass-layoff on children’s educational attainment. The findings reveal the long-term intergenerational impact of the historical market reform in the last century on unequal educational resource allocation which hinders social mobility and perpetuates social inequalities in China nowadays.