Inequality and Social Capital: How Inequality in China's Housing Assets Affects People's Trust

This article examines how inequality in housing assets affects general trust in society. The economic stimulus package carried out in 2008 in China to tackle the global financial crisis increased housing prices and amplified inequality among residents with various initial housing assets. We apply a difference-in-differences strategy to compare cities with various initial levels of housing asset inequality. An increase in such inequality is found to be associated with a lower level of trust. It is also found that in the Chinese context, growing fiscal inequality is further deteriorating trust. These results are most likely driven by concerns regarding social and economic status.