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The Happiness Gains from Sorting and Matching in the Labor Market

Author

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  • Luechinger, Simon

    () (University of Lucerne)

  • Stutzer, Alois

    () (University of Basel)

  • Winkelmann, Rainer

    () (University of Zurich)

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.

Suggested Citation

  • Luechinger, Simon & Stutzer, Alois & Winkelmann, Rainer, 2006. "The Happiness Gains from Sorting and Matching in the Labor Market," IZA Discussion Papers 2019, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2019
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    1. Living with a weak economy
      by chris dillow in Stumbling and Mumbling on 2011-11-17 21:02:19

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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. 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.
    3. 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.
    4. 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.
    5. Prümer, Stephanie, 2019. "Ist der Staat der bessere Arbeitgeber? Arbeitsqualität im Öffentlichen und Privaten Sektor in Deutschland," Discussion Papers 107, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    6. Christian Pfeifer, 2011. "Risk Aversion and Sorting into Public Sector Employment," German Economic Review, Verein für Socialpolitik, vol. 12(1), pages 85-99, February.
    7. 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.
    8. Pfeifer, Christian, 2008. "A Note on Risk Aversion and Labour Market Outcomes: Further Evidence from German Survey Data," IZA Discussion Papers 3523, Institute of Labor Economics (IZA).
    9. Robin Zoutenbier, 2014. "The Impact of Matching Mission Preferences on Well-being at Work," Tinbergen Institute Discussion Papers 14-036/I, Tinbergen Institute.
    10. Rafael Di Tella & Robert MacCulloch, 2007. "Happiness, Contentment and Other Emotions for Central Banks," NBER Working Papers 13622, National Bureau of Economic Research, Inc.
    11. Sean Nicholson-Crotty & Jill Nicholson-Crotty & Sean Webeck, 2019. "Are public managers more risk averse? Framing effects and status quo bias across the sectors," Journal of Behavioral Public Administration, Center for Experimental and Behavioral Public Administration, vol. 2(1).

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    More about this item

    Keywords

    matching; ordered probit; public sector employment; selection; subjective well-being; switching regression;
    All these keywords.

    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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