This paper examines the effects of the abandonment of China’s Grand Canal—the world’s largest and oldest artificial waterway—which served as a disruption to regional trade access. Using an original dataset covering 575 counties over 262 years, we show that the canal’s abandonment contributed to the social turmoil that engulfed North China in the nineteenth century. Counties along the canal experienced an additional 117 percent increase in rebelliousness after the canal’s closure relative to their non-canal counterparts. Our findings highlight the important role that continued access to trade routes plays in reducing conflict. (JEL D74, N75, N95, O18, O22, R12, R42)

This study examines the long-term impact of social disaster experiences on household finance. Using the Cultural Revolution in China, the country’s most pronounced sociopolitical turmoil that completely disrupted millions of people’s lives, we show that households are more likely to participate in the stock market if their eldest member was more exposed to the turmoil. The results remain robust to alternative historical events, socioeconomic factors, and household characteristics. Survey results suggest that the more exposed individuals invest in the stock market because they perceive stocks as low risk rather than have altered risk preferences or trust in stock markets.

This study documents an unexplored corporate rent-seeking phenomenon in non-representative regimes—relocating headquarters (HQ) to the political center. Focusing on China, we find that firms that relocate their HQs to Beijing (the political center) enjoy increased political favors, but those that move to Shanghai or Shenzhen (the country's two main economic centers) do not. Although both groups of movers experience improved profitability, their sustainable growth paths diverge after relocating. Firm productivity and innovation worsen after relocating to Beijing, but improve after moving to Shanghai or Shenzhen. Overall, these findings support the argument that political favoritism benefits firms' profitability but impairs their productivity and innovation.