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Are Youths on Income Support Less Happy? Evidence from Australia

  • Lee, Wang-Sheng

    ()

    (Deakin University)

  • Oguzoglu, Umut

    ()

    (University of Manitoba)

The central research question addressed in this paper is how receipt of income support payments affects the well-being of youths. Using 1997-2004 panel data from a nationally representative survey of Australian youths, we attempt to estimate the size of the welfare stigma faced by Australian youths, where stigma is defined as the effect of welfare receipt on reported happiness levels. In analysing the determinants of happiness, we argue that it is important to control for dynamics and initial conditions. The latter arguably measures an initial setpoint of happiness which the psychological literature has found strong support for. In contrast to the general findings of the existence of a welfare stigma for adults, based on our results using dynamic panel probit models, our findings suggest that for Australian youths, there is a small negative but not statistically significant stigma associated with welfare receipt.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2709.

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Length: 20 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published in: Australian Economic Review, 2007, 40 (4), 369-384
Handle: RePEc:iza:izadps:dp2709
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  1. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  2. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  3. Arulampalam, W., 1998. "A Note on Estimated Coefficients in Random Effects Probit Models," The Warwick Economics Research Paper Series (TWERPS) 520, University of Warwick, Department of Economics.
  4. Winkelmann, Rainer, 2006. "Parental separation and well-being of youths: Evidence from Germany," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 197-208, April.
  5. Alfred Michael Dockery, 2005. "The Happiness of Young Australians: Empirical Evidence on the Role of Labour Market Experience," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 322-335, December.
  6. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  7. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
  8. 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, 07.
  9. Guyonne R. Kalb, 1999. "Labour Supply and Welfare Participation in Australian Two-Adult Households: Comparing 1986/87 with 1994/95," Centre of Policy Studies/IMPACT Centre Working Papers bp-34, Victoria University, Centre of Policy Studies/IMPACT Centre.
  10. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
  11. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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