Yiming Cao, Boston University, and Shuo Chen, Fudan University

 Robin Hood on the Grand Canal: Economic Shock and Rebellions in Qing China, 1650 - 1911

Social scientists have long pondered the effects of economic shocks on social conflicts. Despite the recent literature that has employed exogenous variation in climate changes or global prices to identify the causality, the findings are still inconclusive. This paper uses the abandonment of China's Grand Canal – perhaps the largest infrastructure project in the pre-modern world – in 1826 as a natural experiment to study the link between economic shocks and social conflicts. Using a dataset covering 575 counties from 1650 to 1911, Chen and Cao have found that negative economic shocks significantly generated social instability: in the period of post-abandonment, the annual incidence of rebellions was 0.009 higher in counties bordering the canal than those that are not. The magnitude of the effect accounted for about 122% of the sample mean and was robust across various specifications. The researchers then compare the relative explanatory power of alternative explanations, and conclude that the reform was most likely to arouse rebellions by terminating the canal's role in facilitating trade.