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The Value of Reunification in Germany: An Analysis of Changes in Life Satisfaction

  • Paul Frijters
  • John P. Haisken-DeNew
  • Michale A. Shields

We quantify the value of changes in life circumstances in Germany following reunification. To this end, we develop and implement a fixed-effect estimator for ordinal life satisfaction in the German Socio-Economic Panel. We find strong negative effects on life satisfaction from being recently fired, losing a spouse through either death or separation and time spent in hospital, whilst we find strong positive effects from income and marriage. Using a new casual decomposition technique, we find that East Germans experienced a continued improvement in life satisfaction after 1990 to which increased household incomes contributed around 12%. Most of the increase is explained by improved average circumstances, such as public services. For West Germans, we find virtually no change in satisfaction between 1991 and 1999.

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Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 828.

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Length: 37 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:mlb:wpaper:828
Contact details of provider: Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
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