“Well-being in Transition: Life Satisfaction in Urban China from 2002 to 2012” with Fei Wang (working paper)
Many aspects of life changed for urban residents as the economy continued to liberalize in China from 2002 to 2012. This paper examines the changes in various aspects of life which contributed to the increase in average self reported life satisfaction observed in urban China over this time. The results demonstrate that the improving labor market is chiefly responsible for the overall increase in life satisfaction. This is especially true for the subset of the population whose life satisfaction is most vulnerable during the on-going liberalization of the economy – people with less than a college education. Increasing income also positively contributed to the increase in life satisfaction, but to a lesser extent. The positive contribution of increased personal income was largely offset by income comparison and adaptation to income effects. The data source for this analysis is repeated cross-sectional survey data used in the annual economic reports published by the Chinese Academy of Social Sciences. A modified version of the Oaxaca decomposition method is developed to utilize annual data and is employed to divide the increase in life satisfaction from 2002 to 2012 into segments explained by changes in specific aspects of life over this time.
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