Social capital meets guanxi: Social networks and income inequality in China

Tianyu Yang and Tianfang Zhang

China Economic Review, 2024, vol. 83, issue C

Abstract: Social capital and the Chinese concept of guanxi (connections) can be used to explain changes in income inequality; however, their connotations differ. Previous studies identify social networks as an important factor influencing income inequality in China but ignore the distinction between social capital and guanxi. Using data from the Chinese General Social Survey, this study demonstrates that guanxi contributes to income inequality while social capital improves it. This conclusion still holds true after a series of robustness tests are conducted. Further results demonstrate that the effects of social capital and guanxi on income inequality are substitutable, and social capital can inhibit the role of guanxi in worsening income inequality. Thus, our results confirm that social capital contributes to improving income inequality, providing a new policy perspective for China to formulate income distribution policies.

Keywords: Social capital; Guanxi; Social networks; Income inequality (search for similar items in EconPapers)
JEL-codes: C21 D31 Z13 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:83:y:2024:i:c:s1043951x23001797

DOI: 10.1016/j.chieco.2023.102094

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