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The Happiness Gains From Sorting and Matching in the Labor Market

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  • Simon Luechinger
  • Alois Stutzer
  • Rainer winkelmann

Abstract

Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on reported satisfaction with life it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. We find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocation of workers to the two sectors.

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Bibliographic Info

Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 275.

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Date of creation: Feb 2006
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Handle: RePEc:zur:iewwpx:275

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Keywords: Matching; ordered probit; public sector employment; selection; switching regression; subjective well-being;

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References

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  1. Alois Stutzer & Bruno S. Frey, . "Does Marriage Make People Happy, Or Do Happy People Get Married?," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 143, Institute for Empirical Research in Economics - University of Zurich.
  2. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 928, London School of Economics and Political Science, LSE Library.
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  5. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  6. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004. "Valuing Public Goods: The Life Satisfaction Approach," CREMA Working Paper Series, Center for Research in Economics, Management and the Arts (CREMA) 2004-11, Center for Research in Economics, Management and the Arts (CREMA).
  7. Gruber Jonathan H & Mullainathan Sendhil, 2005. "Do Cigarette Taxes Make Smokers Happier," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 5(1), pages 1-45, July.
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  18. John S. Heywood & W. S. Siebert & Xiangdong Wei, 2002. "Worker sorting and job satisfaction: The case of union and government jobs," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(4), pages 595-609, July.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Living with a weak economy
    by chris dillow in Stumbling and Mumbling on 2011-11-17 15:02:19
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Cited by:
  1. Christian Pfeifer, 2011. "Risk Aversion and Sorting into Public Sector Employment," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 12(1), pages 85-99, 02.
  2. Simon Luechinger & Stephan Meier & Alois Stutzer, 2008. "Why does unemployment hurt the employed?: evidence from the life satisfaction gap between the public and private sectors," Public Policy Discussion Paper, Federal Reserve Bank of Boston 08-1, Federal Reserve Bank of Boston.
  3. Pfeifer, Christian, 2008. "A Note on Risk Aversion and Labour Market Outcomes: Further Evidence from German Survey Data," IZA Discussion Papers 3523, Institute for the Study of Labor (IZA).
  4. Margaretha Buurman & Josse Delfgaauw & Robert Dur & Seth Van den Bossche, 2012. "Public Sector Employees: Risk Averse and Altruistic?," CESifo Working Paper Series 3851, CESifo Group Munich.
  5. Luechinger, Simon & Meier, Stephan & Stutzer, Alois, 2008. "Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and the Private Sector," IZA Discussion Papers 3385, Institute for the Study of Labor (IZA).
  6. Rafael Di Tella & Robert MacCulloch, 2007. "Happiness, Contentment and Other Emotions for Central Banks," NBER Working Papers 13622, National Bureau of Economic Research, Inc.
  7. Cahit Guven & Bent Sørensen, 2012. "Subjective Well-Being: Keeping Up with the Perception of the Joneses," Social Indicators Research, Springer, Springer, vol. 109(3), pages 439-469, December.

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