The Psychological Cost of Market Transition: Mental Health Disparities in Reform-Era China

Abstract

China's post-1978 economic reform has led to fundamental changes in its urban life. Yet little attention has been paid to the effects of this massive societal transformation on individuals' psychological well-being. Using survey data collected from a national sample of 3,443 Chinese urban residents in 2005, 1 examine the effects of employment conditions, political affiliation, and regional level of marketization on self-reported symptoms of psychological distress. The findings show that individuals whose personal conditions expose them more to the risks and uncertainty brought about by market reform, such as self-employed workers, are more likely to suffer from psychological distress. By contrast, residents in more marketized areas tend to feel more satisfied with their economic conditions and therefore have lower levels of distress. Taken together, these results suggest that the reduced social protection resulting from reform contributes to an elevated level of psychological distress. However, a higher perceived level of economic well-being reduces distress and partly compensates for the disruptive effects of China's market transition.