Children Are the Riches of the Poor: The Possibility of Transgenerational Impacts of China’s Targeted Poverty Alleviation (TPA) Campaign

This paper explores the effect of China’s Targeted Poverty Alleviation (TPA) policy by considering the child human capital of households targeted by the policy. Using data from the China Family Panel Studies, we employ a difference-in-differences strategy to identify the effect of TPA on child human capital. The evidence indicates that TPA significantly enhances beneficiary children’s health, cognitive, and non-cognitive abilities. The most substantial improvement is observed in cognitive ability, reaching 49.8 per cent of its standard deviation (0.999). Mechanism tests suggest that TPA achieves these positive outcomes primarily through improving infrastructure, alleviating resource constraints, and enhancing family-process capacity. Specifically, TPA contributes to local infrastructure enhancement to facilitate child human capital development while increasing targeted households’ utilization of medical services for their children and promoting educational inputs in children. Moreover, TPA substantially improves parent–child relationships, increases quality time spent together, and considerably reduces mothers’ depression in targeted households. A back-of-envelop calculation suggests that exposure to the TPA policy during childhood leads to a 0.562 increase in years of schooling and a 13.1 per cent increase in wages for adults in their twenties.