Social Network: An Emerging Income Distribution Mechanism In Transitional Urban China

Abstract

In the decades since 1978, when China initiated economic reform, the country’s income distribution structure has substantially changed. Unlike the majority of existing studies that use individuals’ social network as a key indicator to explain their income in urban China, we contend that social network is an important mechanism that influences income distribution. Using the 2009 Social Networks and Job Search Survey, this study adopts a social capital perspective to investigate how the impact of a social network on income changes with the development of market reforms. The study finds that while social capital from a social network has a positive effect on income, the rates of income return decrease with accumulation of social capital. In addition, with increasing marketization, the income return of accessed social capital decreases, and that of mobilized social capital increases. By comparing multiple resource allocation mechanisms, this paper also discusses the logic of effect change of social capital.