Minding the Happiness Gap: Political Institutions and Perceived Quality of Life in Transition

Milena Nikolova

No 9484, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Along with political and economic changes, the fall of the socialist regimes in Central and Eastern Europe and the former Soviet Union brought about fundamental institutional reforms. Several studies have examined the causes of the increasing unhappiness which accompanied the transition process, including deteriorating public goods, rising inequality, income volatility, stagnating labor market conditions, and changing norms. Yet, few papers have sought explanations for the life satisfaction differentials between transition and non-transition economies. In this paper, I specifically examine the life satisfaction gap between post-socialist and advanced countries and the role of political institutions in explaining this gap. My results imply that both macroeconomic factors and the rule of law explain the overall life satisfaction differential between the advanced and transition societies. The rule of law had an additional role of reducing the happiness gap in the 1990s and may have even reversed it in the post-crisis years. As institutions and macroeconomic conditions continue to improve, post-socialist countries may complete their transformation processes and achieve quality of life levels comparable with those in the West.

Keywords: subjective well-being; institutions; transition economies (search for similar items in EconPapers)
JEL-codes: D02 E02 I31 P20 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-11
New Economics Papers: this item is included in nep-hap, nep-hpe, nep-ltv, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: European Journal of Political Economy , 2016, 45 (Suppl.), 129 - 148

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Journal Article: Minding the happiness gap: Political institutions and perceived quality of life in transition (2016)
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