Welfare, Labor Supply and Heterogeneous Preferences: Evidence for Europe and the US

Olivier Bargain, André Decoster, Mathias Dolls, Dirk Neumann (), Andreas Peichl and Sebastian Siegloch

No 6102, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Following the report of the Stiglitz Commission, measuring and comparing well-being across countries has gained renewed interest. Yet, analyses that go beyond income and incorporate non-market dimensions of welfare most often rely on the assumption of identical preferences to avoid the difficulties related to interpersonal comparisons. In this paper, we suggest an international comparison based on individual welfare rankings that fully retain preference heterogeneity. Focusing on the consumption-leisure trade-off, we estimate discrete choice labor supply models using harmonized microdata for 11 European countries and the US. We retrieve preference heterogeneity within and across countries and analyze several welfare criteria which take into account that differences in income are partly due to differences in tastes. The resulting welfare rankings clearly depend on the normative treatment of preference heterogeneity with alternative metrics. We show that these differences can indeed be explained by estimated preference heterogeneity across countries - rather than demographic composition.

Keywords: preference heterogeneity; Beyond GDP; welfare measures; labor supply (search for similar items in EconPapers)
JEL-codes: C35 D63 H24 H31 J22 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2011-11
New Economics Papers: this item is included in nep-dcm, nep-eec, nep-eur, nep-lab, nep-lma and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - revised version published in: Social Choice and Welfare, 2013, 41 (4), 789-817

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Related works:
Journal Article: Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US (2013)
Working Paper: Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US (2013)
Working Paper: Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US (2011)
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