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The Welfare Effects of Social Mobility

  • Fischer, Justina AV
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    The question whether a socially mobile society is conducive to subjective well-being (SWB) has rarely been investigated. This paper fills this gap by analyzing the SWB effects of intergenerational earnings mobility and equality in education at the societal level. Using socio-demographic information on 44’000 individuals in 30 OECD countries obtained from the World Values Survey, this study shows that living in a socially mobile society is conducive to individual life satisfaction. Differentiating between perceived and actual social mobility, we find that both exert rather independent effects, particularly in their interplay with income inequality. We identify a positive interaction of perceived social mobility that mitigates its overall SWB lowering effect, supporting Alesina et al. (2004). In contrast, a high degree of actual social mobility yields an overall impact of income inequality that is SWB lowering, while for low social mobility the effect of inequality is positive. These interactions hold stronger for pre-transfer than post-transfer income inequality. Actual social mobility appears to be appreciated only by conservative persons, while leftist oriented individuals are indifferent. Robustness using a world sample is tested.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16339.

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    Date of creation: Dec 2008
    Date of revision: Jun 2009
    Handle: RePEc:pra:mprapa:16339
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    1. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    2. 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.
    3. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    4. Christian Bjørnskov & Axel Dreher & Justina A.V. Fischer, 2008. "Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence," KOF Working papers 08-192, KOF Swiss Economic Institute, ETH Zurich.
    5. Senik, Claudia, 2006. "Ambition and Jealousy: Income Interactions in the "Old" Europe versus the "New" Europe and the United States," IZA Discussion Papers 2083, Institute for the Study of Labor (IZA).
    6. Justina Fischer & Benno Torgler, 2008. "Social Capital and Relative Income Concerns: Evidence from 26 Countries," TWI Research Paper Series 38, Thurgauer Wirtschaftsinstitut, Universit�t Konstanz.
    7. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    8. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers 2646, C.E.P.R. Discussion Papers.
    9. Jordahl, Henrik, 2007. "Inequality and Trust," Working Paper Series 715, Research Institute of Industrial Economics.
    10. Christian Bjørnskov & Axel Dreher & Justina Fischer, 2008. "Cross-country determinants of life satisfaction: exploring different determinants across groups in society," Social Choice and Welfare, Springer, vol. 30(1), pages 119-173, January.
    11. John F. Helliwell & Haifang Huang, 2006. "How's Your Government? International Evidence Linking Good Government and Well-Being," NBER Working Papers 11988, National Bureau of Economic Research, Inc.
    12. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    13. repec:oup:qjecon:v:110:y:1995:i:3:p:551-84 is not listed on IDEAS
    14. Christian Bjørnskov & Axel Dreher & Justina Fischer, 2007. "The bigger the better? Evidence of the effect of government size on life satisfaction around the world," Public Choice, Springer, vol. 130(3), pages 267-292, March.
    15. David Dorn & Justina Fischer & Gebhard Kirchgässner & Alfonso Sousa-Poza, 2007. "Is It Culture or Democracy? The Impact of Democracy and Culture on Happiness," Social Indicators Research, Springer, vol. 82(3), pages 505-526, July.
    16. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
    17. Christian Bjørnskov, 2007. "Determinants of generalized trust: A cross-country comparison," Public Choice, Springer, vol. 130(1), pages 1-21, January.
    18. La Ferrara, Eliana & Alesina, Alberto, 2005. "Preferences for Redistribution in the Land of Opportunities," Scholarly Articles 4552533, Harvard University Department of Economics.
    19. repec:oup:qjecon:v:107:y:1992:i:1:p:123-50 is not listed on IDEAS
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