This paper uses the Cultural Revolution in China as a quasi-experiment
to analyze the long-term impact of interrupted education during an economic
transition with many opportunities that reward educational qualifications. We
focus on the remedial human capital investment decisions taken by individuals
whose education was interrupted by the Cultural Revolution. We find substantial
increases in schooling levels among the adult cohorts as they invest in continuous
education to compensate for their interrupted schooling and to take advantage of
new opportunities afforded by the economic transition. The initial lower level of
education caused by the institutional shock can be largely remedied. Estimates
of the educational loss caused by the Cultural Revolution that ignore subsequent
re-investments would not accurately measure the true losses inflicted by this
event.