Falling Financial Satisfaction in a Rapidly Growing Chinese Economy: What Role Does Education Play in Determining Financial Satisfaction?
Kern, Andreas T
While disposable income in both rural and urban China has dramatically increased, financial satisfaction declined in the early-2000s and increased slightly in the late 2000s. This paper analyzes the relationship between education and financial satisfaction. The major finding is that financial satisfaction is only positively correlated with education among those at the highest income level while the correlation remains negative among all other income groups. As China's economy has grown, income inequality has become an increasingly important factor in reducing financial satisfaction. While education inequality resulting from unequal distribution and lack of sufficient educational resources has created heavy entry barriers to secondary and post-secondary education, increasing income inequality only compounds the problem. In a country where an education premium exists, failure of education to satisfy people's expectation of future income may ultimately cause social instability and low government credibility. In this spirit, findings of this paper can serve as a prescription for the Chinese central government to improve its ongoing reform, manifest greater socio-economic mobility, and establish a harmonious society
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