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Life Satisfaction in Urban Ethiopia: Trends and determinants

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  • Alem, Yonas

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Köhlin, Gunnar

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

Most studies of subjective well-being in developing countries use cross-sectional data, which makes it difficult to control for unobserved individual heterogeneity. In this paper, we use three rounds of panel data and robust non-linear panel data models to investigate the trends and determinants of life satisfaction in urban Ethiopia. Although Ethiopia exhibited rapid economic growth during the analyzed period, the average reported level of life satisfaction declined. Regression results show that despite the significant difference between urban Ethiopia and industrialized countries in terms of economic and social conditions, many of the determinants of life satisfaction are similar. This includes, age, marital status, health, unemployment, economic status, relative position and educational achievement. Our results also indicate that both individual (respondent) and household level versions of these variables are important determinants of life satisfaction. This provides some evidence on the interdependence of individual and household subjective well-being in developing countries. The fact that rapid economic growth was accompanied by a decline in citizens’ average reported level of life satisfaction brings the pro-poorness of the recent economic growth in Ethiopia into question. We argue that economic growth that trickles down to the poor and ensures creation of stable jobs would be welfare enhancing.

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File URL: http://hdl.handle.net/2077/31779
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 548.

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Length: 31 pages
Date of creation: 19 Dec 2012
Date of revision:
Handle: RePEc:hhs:gunwpe:0548

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Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: Life Satisfaction; Urban Ethiopia; Economic Growth; Correlated Random-Effects Ordered Probit.;

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