Hukou Changes and Subjective Well-Being in China

The literature on subjective well-being has highlighted the negative effects associated with the restrictions and inequality imposed by the hukou system on China's rural population. However, quantifying the cost of holding a rural hukou has generally been challenging because it can reflect unobserved individual characteristics related to educational and occupational choices. Thanks to RUMiC, a new longitudinal database on China, this limitation can be overcome by exploiting exogenous changes in hukou status due to land expropriation. The results support that receiving an urban hukou substantially enhances subjective well-being within the household, especially for males. The results complement a growing literature on subjective well-being focusing on China.