Why has happiness inequality increased? Suggestions for promoting social cohesion

Leonardo Becchetti, Riccardo Massari and Paolo Naticchioni
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Riccardo Massari: University of Rome La Sapienza

No 177, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: The paper focuses on happiness inequality, an issue rather neglected in the literature. We analyze the increase in happiness inequality observed in Germany between 1991 and 2007 by means of the German Socio-Economic Panel (GSOEP) database. We make use of a recent methodology that allows decomposing the change in happiness inequality into the composition and the coefficient effect for each covariate. We find that the increase in happiness inequality is mainly driven by changes in the composition of covariates, while coefficient effect is negligible, i.e., returns from happiness “fundamentals” are stable over time. Among composition effect, the rise in happiness inequality is explained –among others- by labour market conditions. Furthermore, the increase in education levels has an inequality-reducing impact on happiness. One clear cut policy implication of our paper is that policies enhancing education and labour market performance are crucial to reduce happiness inequality and the potential social tensions arising from it.

Keywords: happiness inequality; education; income inequality; labour market performance. (search for similar items in EconPapers)
JEL-codes: A13 I28 J17 J21 J28 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010
New Economics Papers: this item is included in nep-eur, nep-hap and nep-lab
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2010-177

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