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The Impact of Income Inequality on Subjective Well-Being: The Case of China

Jiawen Ding, Javier Salinas-Jiménez and Maria del Mar Salinas-Jiménez ()
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Jiawen Ding: Universidad Autóma de Madrid
Javier Salinas-Jiménez: Universidad Autóma de Madrid
Maria del Mar Salinas-Jiménez: Universidad de Extremadura

Journal of Happiness Studies, 2021, vol. 22, issue 2, No 16, 845-866

Abstract: Abstract The growing literature on happiness economics suggests that, together with absolute income, individual well-being is affected by relative income both horizontally (i.e. because of differences between an individual’s income and that of others to whom she compares) and vertically (i.e. compared to changes in individuals’ own income). Moreover, the way in which individuals value their relative situation and the distribution of income will determine how inequality affects individual well-being. This paper aims to examine the relationship between these variables in the case of China, focusing mainly on how income inequality affects subjective well-being. Using data from the CGSS, the results suggest that both absolute and relative income affect subject well-being, and that an inverted-U shaped relationship between income inequality and individual well-being appears at least for urban residents, whereas this relationship tend to be negative in the case of people living in rural areas.

Keywords: Subjective wellbeing; Inequality; Interpersonal preferences; D31; D6; I30; I31; O53 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10902-020-00254-4

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