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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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Listed author(s):
  • 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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7365.

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Length: 40 pages
Date of creation: Apr 2013
Handle: RePEc:iza:izadps:dp7365
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Keywords: indirect effect; well-being; mental health; schooling; windfall income; HILDA survey;

Other versions of this item:

Find related papers by 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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Cited by:

  1. Markus Frölich & Martin Huber, 2014. "Direct and indirect treatment effects: causal chains and mediation analysis with instrumental variables," CeMMAP working papers CWP31/14, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. 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.
  3. 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," LSE Research Online Documents on Economics 60278, London School of Economics and Political Science, LSE Library.
  4. Huber, Martin & Mellace, Giovanni & Lechner, Michael, 2014. "Why do tougher caseworkers increase employment? The role of programme assignment as a causal mechanism," Economics Working Paper Series 1414, University of St. Gallen, School of Economics and Political Science.
  5. 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.

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