The Value of Reunification in Germany: An Analysis of Changes in Life Satisfaction

Paul Frijters, John P. Haisken-DeNew and Michale A. Shields
Authors registered in the RePEc Author Service: John P. de New

No 828, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: We quantify the value of changes in life circumstances in Germany following reunification. To this end, we develop and implement a fixed-effect estimator for ordinal life satisfaction in the German Socio-Economic Panel. We find strong negative effects on life satisfaction from being recently fired, losing a spouse through either death or separation and time spent in hospital, whilst we find strong positive effects from income and marriage. Using a new casual decomposition technique, we find that East Germans experienced a continued improvement in life satisfaction after 1990 to which increased household incomes contributed around 12%. Most of the increase is explained by improved average circumstances, such as public services. For West Germans, we find virtually no change in satisfaction between 1991 and 1999.

Keywords: Life satisfaction; German Reunification; Random and Fixed-Effects Panel Models; Causal Decomposition (search for similar items in EconPapers)
JEL-codes: C23 C25 I31 Z1 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2001
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The Value of Reunification in Germany: An Analysis of Changes in Life Satisfaction (2003)
Working Paper: The Value of Reunification in Germany: An Analysis of Changes in Life Satisfaction (2002)
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