This dissertation examines how China’s Hukou system—its household registration policy dividing rural and urban residents—shapes subjective well-being (SWB) through inequality and income comparisons. It presents three empirical studies analyzing SWB among rural residents, migrants (both rural-to-urban and urban-to-urban), and urban residents. A key focus is how income comparison within reference groups influences SWB: rising peer incomes may raise hope for personal advancement (the “tunnel effect”) or trigger status anxiety (the “status effect”). The thesis shows that migrants’ well-being is shaped not just by absolute income but also by multiple reference group comparisons, and highlights differences between objective and subjective income perceptions. Overall, the dissertation enriches understanding of how systemic inequality and relative income effects under the Hukou system affect well-being in contemporary China.