Explaining the Income-Distribution Puzzle in Happiness Research: Theory and Evidence
AbstractThe nexus between income and happiness is very much disputed. Many cross-sectional studies see a positive relationship, most longitudinal studies don’t. Starting from the fact that the theoretical basis in happiness research has been comparatively weak, we develop a model that identifies distributional consequences of unemployment with their importance conditional per-capita income as at the heart of the matter. Our theory is backed by empirical evidence on OECD data: in low-income countries, well-being significantly depends on income, in highincome countries on the unemployment-related Gini. Insofar, our findings establish the income-satiation hypothesis of longitudinal studies also in cross-sectional perspective.
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Bibliographic InfoPaper provided by Helmut Schmidt University, Hamburg in its series Working Paper with number 117/2012.
Length: 26 pages
Date of creation: 20 Jun 2012
Date of revision:
Happiness; Welfare Economics; Income Distribution; Unemployment;
Find related papers by JEL classification:
- D60 - Microeconomics - - Welfare Economics - - - General
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
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