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The Marginal Income Effect of Education on Happiness: Estimating the Direct and Indirect Effects of Compulsory Schooling on Well-Being in Australia

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  • Powdthavee, Nattavudh

    () (University of Warwick)

  • Lekfuangfu, Warn N.

    () (Chulalongkorn University)

  • Wooden, Mark

    () (Melbourne Institute of Applied Economic and Social Research)

Abstract

Many economists and educators favour public support for education on the premise that education improves the overall well-being of citizens. However, little is known about the causal pathways through which education shapes people's subjective well-being (SWB). This paper explores the direct and indirect well-being effects of extra schooling induced through compulsory schooling laws in Australia. We find the net effect of schooling on later SWB to be positive, though this effect is larger and statistically more robust for men than for women. We then show that the compulsory schooling effect on male's SWB is indirect and is mediated through income.

Suggested Citation

  • Powdthavee, Nattavudh & Lekfuangfu, Warn N. & Wooden, Mark, 2013. "The Marginal Income Effect of Education on Happiness: Estimating the Direct and Indirect Effects of Compulsory Schooling on Well-Being in Australia," IZA Discussion Papers 7365, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7365
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    Cited by:

    1. Markus Frölich & Martin Huber, 2017. "Direct and indirect treatment effects–causal chains and mediation analysis with instrumental variables," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 79(5), pages 1645-1666, November.
    2. Martin Huber & Michael Lechner & Giovanni Mellace, 2017. "Why Do Tougher Caseworkers Increase Employment? The Role of Program Assignment as a Causal Mechanism," The Review of Economics and Statistics, MIT Press, vol. 99(1), pages 180-183, March.
    3. Hamad, Rita & Elser, Holly & Tran, Duy C. & Rehkopf, David H. & Goodman, Steven N., 2018. "How and why studies disagree about the effects of education on health: A systematic review and meta-analysis of studies of compulsory schooling laws," Social Science & Medicine, Elsevier, vol. 212(C), pages 168-178.
    4. Beja Jr., Edsel, 2013. "Does economic prosperity bring about a happier society? Empirical remarks on the Easterlin Paradox debate," MPRA Paper 49446, University Library of Munich, Germany.
    5. Viviana Celli, 2019. "Causal Mediation Analysis in Economics: objectives, assumptions, models," Working Papers 12/19, Sapienza University of Rome, DISS.
    6. Nattavudh Powdthavee & Mark Wooden, 2014. "What Can Life Satisfaction Data Tell Us about Discrimination against Sexual Minorities? A Structural Equation Model for Australia and the United Kingdom," Melbourne Institute Working Paper Series wp2014n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Martin Huber & Mark Schelker & Anthony Strittmatter, 2019. "Direct and Indirect Effects based on Changes-in-Changes," Papers 1909.04981, arXiv.org, revised Oct 2019.
    8. Matthew J. Easterbrook & Toon Kuppens & Antony S. R. Manstead, 2016. "The Education Effect: Higher Educational Qualifications are Robustly Associated with Beneficial Personal and Socio-political Outcomes," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(3), pages 1261-1298, April.
    9. Phumsith Mahasuweerachai & Siwarut Pangjai, 2018. "Does Piped Water Improve Happiness? A Case from Asian Rural Communities," Journal of Happiness Studies, Springer, vol. 19(5), pages 1329-1346, June.
    10. Matthew Manning & Christopher M. Fleming & Christopher L. Ambrey, 2016. "Life Satisfaction and Individual Willingness to Pay for Crime Reduction," Regional Studies, Taylor & Francis Journals, vol. 50(12), pages 2024-2039, December.
    11. Beja Jr., Edsel, 2013. "Does economic prosperity bring about a happier society? Empirical remarks on the Easterlin Paradox debate sans Happiness Adaptation," MPRA Paper 50633, University Library of Munich, Germany.

    More about this item

    Keywords

    windfall income; schooling; mental health; well-being; indirect effect; HILDA survey;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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