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The Happiness Gains from Sorting and Matching in the Labor Market

Author Info

Listed author(s):
  • 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 subjective well-being 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. In an analysis with data from the European Social Survey, 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. A companion analysis of data from the German Socio-Economic Panel shows that selection on unobservables is reduced once we include additional controls for preference heterogeneity.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.63392.de/diw_sp0045.pdf
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 45.

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Length: 39 p.
Date of creation: 2007
Handle: RePEc:diw:diwsop:diw_sp45
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Keywords: Matching; ordered probit; public sector employment; selection; switching regression; subjective well-being;

Other versions of this item:

Find related papers by JEL classification:
  • D60 - Microeconomics - - Welfare Economics - - - General
  • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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  5. Frey, Bruno S & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," Economic Journal, Royal Economic Society, vol. 110(466), pages 918-938, October.
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  26. John S. Heywood & W. S. Siebert & Xiangdong Wei, 2002. "Worker Sorting and Job Satisfaction: The Case of Union and Government Jobs," 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. Simon Luechinger & Stephan Meier & Alois Stutzer, 2010. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 998-1045.
  2. 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).
  3. Buurman, Margaretha & Delfgaauw, Josse & Dur, Robert & Van den Bossche, Seth, 2012. "Public sector employees: Risk averse and altruistic?," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 279-291.
  4. Robin Zoutenbier, 2014. "The Impact of Matching Mission Preferences on Well-being at Work," Tinbergen Institute Discussion Papers 14-036/I, Tinbergen Institute.
  5. Robin Zoutenbier, 2016. "The impact of matching mission preferences on well-being at work," Economics of Governance, Springer, vol. 17(3), pages 295-315, August.
  6. Christian Pfeifer, 2011. "Risk Aversion and Sorting into Public Sector Employment," German Economic Review, Verein für Socialpolitik, vol. 12(1), pages 85-99, 02.
  7. 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 08-1, Federal Reserve Bank of Boston.
  8. Rafael Di Tella & Robert MacCulloch, 2007. "Happiness, Contentment and Other Emotions for Central Banks," NBER Working Papers 13622, National Bureau of Economic Research, Inc.
  9. Cahit Guven & Bent Sørensen, 2012. "Subjective Well-Being: Keeping Up with the Perception of the Joneses," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(3), pages 439-469, December.

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