Income Satisfaction Inequality and its Causes
Ada Ferrer-i-Carbonell and
Bernard van Praag ()
No 854, IZA Discussion Papers from Institute of Labor Economics (IZA)
In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of individual responses to an Income Satisfaction question posed in the German Socio- Economic Panel (GSOEP). Income satisfaction is the subjective analogue of the objective income concept and includes objective income inequality as a special case. The paper introduces a method to decompose Income Satisfaction Inequality according to the contributions from variables such as income, education, and the number of children. Given the panel structure of the data, inequality may be attributed partly to permanent individual circumstances and partly to transitory changes. The paper shows that by far the largest part of the satisfaction inequality has to be ascribed to unobserved heterogeneity. Distinguishing between a structural and an unexplained part of inequality we find that income explains the largest part of structural Income Satisfaction Inequality together with household membership; for non-working individuals, the age distribution is very relevant as well.
Keywords: income inequality; income satisfaction; financial satisfaction; equivalent income; variance decomposition (search for similar items in EconPapers)
JEL-codes: D63 I32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-edu and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33) Track citations by RSS feed
Published in: Journal of Economic Inequality, 2003, 1 (2), 107-127
Downloads: (external link)
Journal Article: Income Satisfaction Inequality and its Causes (2003)
Working Paper: Income Satisfaction Inequality and Its Causes (2003)
Working Paper: Income Satisfaction Inequality and its Causes (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp854
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().