Abstract: Since the reform and opening up, Chinas economic development has achieved remarkable results, but the issues of income inequality and insufficient shared development are still prominent, which is not conducive to the improvement of residents wellbeing. Using the data from China Family Panel Studies, this study empirically explores the relationship between income inequality, shared development, and residents wellbeing. The results suggest that there is a nonlinear inverted Ushaped relationship between income inequality and residents wellbeing, and shared development moderates this relationship, enhancing the tolerance of groups with higher degrees of shared development towards income inequality, making it more easily for income inequality to play a role in improving residents wellbeing. Policy variables such as targeted poverty alleviation, rural revitalization and social security expenditure also help to improve the tolerance of household wellbeing to income inequality. Therefore, relevant government departments should actively implement effective measures to reduce income inequality, take multiple measures to improve the level of shared development, and focus on implementing poverty alleviation and security policies so as to further enhance the wellbeing of residents families and accelerate the realization of the great goal of common prosperity.

Key words: income inequality; shared development; residents wellbeing; nonlinear relationship; policy moderation effect