Earning Less than Your Peers: Relative Wage Deprivation and Subjective Well-Being in Chile

We study the relationship between relative deprivation and subjective well-being in a developing economy. Using nationally representative household surveys from Chile (2009–2017), we construct an age-occupation-based measure of relative wage deprivation. We find that earning less than comparable peers is significantly associated with lower self-rated health, even after controlling for absolute income, demographic characteristics, and a rich set of socioeconomic and contextual factors. We further document substantial heterogeneity and non-linearity: the effect is persistent across the life course for women, while for men it emerges only at older ages. These results underscore the role of within-group income comparisons in shaping subjective well-being in unequal labour markets.