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Life Satisfaction in Urban Ethiopia: Trends and determinants

Yonas Alem and Gunnar Köhlin ()

No 548, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Most studies of subjective well-being in developing countries use cross-sectional data, which makes it difficult to control for unobserved individual heterogeneity. In this paper, we use three rounds of panel data and robust non-linear panel data models to investigate the trends and determinants of life satisfaction in urban Ethiopia. Although Ethiopia exhibited rapid economic growth during the analyzed period, the average reported level of life satisfaction declined. Regression results show that despite the significant difference between urban Ethiopia and industrialized countries in terms of economic and social conditions, many of the determinants of life satisfaction are similar. This includes, age, marital status, health, unemployment, economic status, relative position and educational achievement. Our results also indicate that both individual (respondent) and household level versions of these variables are important determinants of life satisfaction. This provides some evidence on the interdependence of individual and household subjective well-being in developing countries. The fact that rapid economic growth was accompanied by a decline in citizens’ average reported level of life satisfaction brings the pro-poorness of the recent economic growth in Ethiopia into question. We argue that economic growth that trickles down to the poor and ensures creation of stable jobs would be welfare enhancing.

Keywords: Life Satisfaction; Urban Ethiopia; Economic Growth; Correlated Random-Effects Ordered Probit. (search for similar items in EconPapers)
JEL-codes: C25 D60 I31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-12-19
New Economics Papers: this item is included in nep-afr and nep-ure
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