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

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  • Yang, Tianyu
  • Zhang, Tianfang

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.

Suggested Citation

  • Yang, Tianyu & Zhang, Tianfang, 2024. "Social capital meets guanxi: Social networks and income inequality in China," China Economic Review, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:chieco:v:83:y:2024:i:c:s1043951x23001797
    DOI: 10.1016/j.chieco.2023.102094
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    References listed on IDEAS

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    More about this item

    Keywords

    Social capital; Guanxi; Social networks; Income inequality;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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