Heterogeneity in Subjective Wellbeing: An Application to Occupational Allocation in Africa

Paolo Falco, William Maloney, Bob Rijkers and Mauricio Sarrias

No 7057, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: By exploiting recent advances in mixed (stochastic parameter) ordered probit estimators and a unique longitudinal dataset from Ghana, this paper examines the distribution of subjective wellbeing across sectors of employment and offers insights into the functioning of developing country labor markets. We find little evidence for the overall inferiority of the small firm informal sector: there is not a robust average satisfaction premium for formal work vis a vis self-employment or informal salaried work and, in fact, informal firm owners who employ others are on average significantly happier than formal workers. Moreover, the estimated underlying random parameter distributions unveil substantial latent heterogeneity in subjective wellbeing around the central tendency that fixed parameter models cannot detect. All job categories contain both relatively happy and disgruntled workers. Concretely, roughly 67%, 50%, 40% and 59% prefer being a small firm employer, sole proprietor, informal salaried, and civic worker respectively, to formal work. Hence, there is a high degree of overlap in the distribution of satisfaction across sectors. The results are robust to the inclusion of fixed effects, and using alternate measures of satisfaction. Job characteristics, self-perceived autonomy and experimentally elicited measures of attitudes toward risk do not appear to explain these distributional patterns.

Keywords: subjective wellbeing; mixed ordered probit; self-employment; informality; developing country labor markets; Africa (search for similar items in EconPapers)
JEL-codes: C35 I32 J2 J3 J41 L26 O17 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2012-11
New Economics Papers: this item is included in nep-afr, nep-dev, nep-hap, nep-iue, nep-lab and nep-ltv
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Heterogeneity in subjective wellbeing: An application to occupational allocation in Africa (2015)
Working Paper: Heterogeneity in subjective wellbeing: an application to occupational allocation in Africa (2012)
Working Paper: Heterogeneity in Subjective Wellbeing: An Application to Occupational Allocation in Africa (2010)
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