Universal basic education and the vulnerability to poverty: evidence from compulsory education in rural China

This article studies the effects of universal basic education on the vulnerability to poverty in rural China while exploring this mechanism from a capability perspective. A regression-discontinuity design based on the implementation of compulsory education is used to identify the effects with household data. We find that compulsory education has significantly reduced the vulnerability to poverty by popularizing basic education in rural China. Regarding the mechanism itself, vulnerability to structural poverty is the primary source of vulnerability in rural China. Universal basic education’s effect on reducing vulnerability to structural poverty is larger than that on reducing vulnerability to transitory poverty. Further analysis reveals that compulsory education primarily enhances various capabilities to obtain permanent income—such as cognitive abilities, health and the engagement in non-agricultural jobs—which are important pathways to reducing vulnerability to structural poverty. Our findings suggest that universal basic education has a fundamental effect on reducing vulnerability.