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Why has happiness inequality increased? Suggestions for promoting social cohesion

Author

Listed:
  • Leonardo Becchetti

    () (University of Rome Tor Vergata)

  • Riccardo Massari

    (University of Rome La Sapienza)

  • Paolo Naticchioni

    (Univ. of Cassino, Univ. of Rome La Sapienza, CeLEG (LUISS))

Abstract

The paper focuses on happiness inequality, an issue rather neglected in the literature. We analyze the increase in happiness inequality observed in Germany between 1991 and 2007 by means of the German Socio-Economic Panel (GSOEP) database. We make use of a recent methodology that allows decomposing the change in happiness inequality into the composition and the coefficient effect for each covariate. We find that the increase in happiness inequality is mainly driven by changes in the composition of covariates, while coefficient effect is negligible, i.e., returns from happiness “fundamentals” are stable over time. Among composition effect, the rise in happiness inequality is explained –among others- by labour market conditions. Furthermore, the increase in education levels has an inequality-reducing impact on happiness. One clear cut policy implication of our paper is that policies enhancing education and labour market performance are crucial to reduce happiness inequality and the potential social tensions arising from it.

Suggested Citation

  • Leonardo Becchetti & Riccardo Massari & Paolo Naticchioni, 2010. "Why has happiness inequality increased? Suggestions for promoting social cohesion," Working Papers 177, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2010-177
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2010-177.pdf
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    References listed on IDEAS

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    1. Kevin Sheedy & Bernardo Guimaraes, 2011. "A model of equilibrium institutions," 2011 Meeting Papers 49, Society for Economic Dynamics.
    2. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Cahiers de recherche 9406, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    3. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    4. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    5. Kevin Sheedy & Bernardo Guimaraes, 2011. "A model of equilibrium institutions," 2011 Meeting Papers 49, Society for Economic Dynamics.
    6. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Luisa Corrado & Paola Samˆ, 2012. "Inside the Life Satisfaction Blackbox," Econometica Working Papers wp44, Econometica.
    2. Sarracino, Francesco, 2013. "Determinants of subjective well-being in high and low income countries: Do happiness equations differ across countries?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 42(C), pages 51-66.
    3. Leonardo Becchetti & Alessandra Pelloni, 2013. "What are we learning from the life satisfaction literature?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), pages 113-155.
    4. Bartolini, Stefano & Sarracino, Francesco, 2014. "The dark side of Chinese growth: Explaining decreasing well-being in times of economic boom," MPRA Paper 57765, University Library of Munich, Germany.

    More about this item

    Keywords

    happiness inequality; education; income inequality; labour market performance.;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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