The decline in perceived happiness within economic prosperity in Chinese society calls for further examination. In this research, we investigate the effect of employment in public sector work units on perceived happiness through the mediation of economic and social status relative deprivations. In the reform era of China, work unit is still an important mechanism maintaining social inequality, and those working in government/Communist Party agencies and public institutions have advantages of getting access to high wage, comprehensive welfare and the manipulation of administrative public power. Such economic and social status advantages are expected to reduce their relative deprivation and further promote their perceived happiness. Using a nationwide survey data conducted in 2006, we find working in public sector can significantly reduce the odds of experiencing economic relative deprivation, which is further contributive to the improvement of subjective wellbeing.