Abstract
Mental health problems represent one most pressing concerns in the world, which produce costly consequences for individuals, families and society as a whole. One of the determinants on mental health during the COVID-19 pandemic is income. To complement relevant research and provide valuable recommendations for governments and societies, this study investigates the nexus between income and mental health in China by employing 8049 observations from the 2020 China Family Panel Studies. Using ordinary least squares regression we find the significant positive relationship between income and mental health, and estimate the effect of income on mental health. Furthermore, this effect is heterogeneous depending on individuals' education level and registered residence type. Finally, individuals' economic status and happiness are shown to be the potential mechanism through which the effect of income on mental health operates.