A Time-Series Cross-Sectional Analysis of Exposure to Competition and Sense of Fairness in Urban China

Situated in transitional China with a rapid market expansion and rising inequality, this study discusses the relationship between an exposure to competition and sense of fairness. A puzzle rises as whether exposure to severe competition encourages individuals to averse risks and desire for fairness, or it contributes to a belief in the law of jungle and a tolerance on inequality. Labor market incentive hypothesis has already supported the validity of college (or high school) premium as an indicator of competition. Therefore, I apply a time-series cross-sectional calculation of competition index based on Chinese Household Income Projects (CHIP) and Urban Household Survey (UHS), represented by college/high school premium at the time of entering senior/junior high school. This measurement fully reflects the heterogeneity of macro condition on individuals by time-series cross-sectional consideration.

The data on sense of fairness are drawn from urban sample of Chinese General Social Survey (CGSS) 2010, 2011, 2012 and 2013, nationally representative social surveys. Sense of fairness is measured as to what extent one agrees that the society is fair. By coding competition index to the pooled datasets, I obtain three main findings. 1) The severity of competition one experiences in school is likely to exert an undermining effect on sense of fairness, which is still effective when one leaves school. 2) This undermining effect is contingent on economic development, with a more explicit effect in less developed areas while insignificantly in developed areas. 3) Self-rated class ratings is positively related to sense of fairness due to self-interest explanation, yet competition has little effect on this relationship. This study emphasizes the role of competition as a determinant of social mentality in transitional China that should be explored in future research.