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The Welfare Effects of Social Mobility: An Analysis for OECD countries

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  • Fischer, Justina AV

Abstract

The question whether a socially mobile society is conducive to subjective well-being (SWB) has rarely been investigated. This paper fills this gap by analyzing the SWB effects of intergenerational earnings mobility and equality in educational attainment at the societal level. Using socio-demographic information on 44’000 individuals in 30 OECD countries obtained from the World Values Survey 1997-2001, this study shows that living in a socially mobile society is conducive to individual life satisfaction. Differentiating between perceived and actual social mobility, we find that both exert rather independent effects, particularly in their interplay with income inequality. We identify a positive interaction of perceived social mobility that mitigates the overall SWB lowering effect of income inequality. In contrast to expectations, a high degree of actual social mobility yields an overall impact of income inequality that is SWB lowering, while for low social mobility the effect of inequality is positive. Thus, people bear income inequality more easily when they perceive their society as mobile, but also - surprisingly - when their society is actually rather immobile. These interactions hold stronger for pre-transfer than post-transfer income inequality suggesting that government redistribution disentangles the effect of income inequality from that of social mobility. Robustness using a world sample is tested.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17070.

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Date of creation: 02 Sep 2009
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Handle: RePEc:pra:mprapa:17070

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Keywords: Social mobility; Happiness; Well-Being; Life satisfaction; Inequality; Voting; Equal opportunities; Fairness; Justice;

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  1. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina AV, 2008. "Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence," Working Paper Series in Economics and Finance 699, Stockholm School of Economics.
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  5. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina A. V. & Schnellenbach, Jan, 2009. "On the relation between income inequality and happiness: Do fairness perceptions matter?," Center for European, Governance and Economic Development Research Discussion Papers 91, University of Goettingen, Department of Economics.
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Cited by:
  1. Juliana Londoño, 2011. "Movilidad social, preferencias redistributivas y felicidad en Colombia," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.

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