Shaoda Wang-Temple Destruction.pdfVIP

Buddha’s Grace Illuminates All: Temple Destruction, School Construction, and Economic Growth in the 20th Century China Shaoda Wang† Boxiao Zhang‡ April 2015 Very Preliminary Version, Please Do Not Cite or Circulate Abstract This study intends to estimate the causal effects of human capital investment on economic development. We do so by adopting a novel natural experiment in the early 20th century China called the “Temple Destruction Movement,” under which the local governments were required to close Buddha\Tau temples and take over temple assets to construct modern primary schools in the local areas. Our Difference-in-Differences estimates indicate that places with more temple assets ex ante constructed more schools during the movement. In addition, an Instrumental Variable approach provides evidence that regions constructed more schools during the movement period experienced faster economic development later on. Keywords: Temple Destruction Movement; Human Capital; Economic Development JEL : O15; O18; N35 † Department of Agricultural and Resource Economics, U.C. Berkeley. ‡ Guanghua School of Management, Peking University. We are indebted to Noam Yuchtman and Se Yan for their generous support. We would also like to thank Debin Ma, Yu Hao, Paul Katz and Xuenong Zhou for their helpful comments. Financial support from the Berkeley Economic History Lab (BEHL) is gratefully acknowledged. Any remaining errors are solely ours. 1 1 Introduction The relationship between human capital accumulation and economic development has always fascinated economists (Barro 1991, 2001; Romer et al 1992; Klenow et al 2000; D