Can entrepreneurship bring happiness? Evidence from China

This paper investigates the relationship between entrepreneurial activities and the happiness of entrepreneurs. We estimate the effects of entrepreneurial decision-making, business experience and other factors on happiness by using China Household Finance Survey data. Our results derived from maximum likelihood estimation methods indicate that entrepreneurial decision-making and entrepreneurial experience affect household happiness significantly. The family well-being is significantly increased if the family is entrepreneurial, and it will be higher if actively entrepreneurial. Both entrepreneurial experience and entrepreneurial investment of time have significantly positive effect on the probability of family well-being. In addition, we find that the mechanism by which entrepreneurship brings happiness to households is through raising household income and wealth, that is, income effects and wealth effects.     

Lags and Leads in Life Satisfaction in Korea: When Gender Matters

Using detailed longitudinal data from the Korean Labor and Income Panel Study (KLIPS) from 1998 to 2008, this paper finds significant gender differences in impacts as well as adaptation patterns to major life and labor market events in Korea. Men remain on a higher happiness level throughout marriage, while women return to their baseline happiness within only two years. Consequently, men suffer more from divorce and the death of a spouse. This marital gender happiness gap is equivalent to a (husband only) increase of annual per capita household income of approximately US$17,800. The study further finds that men suffer more from unemployment. Results are robust to the inclusion of multiple simultaneous events and the use of different estimators.     

The determinants of entrepreneurship gender gaps: A cross‐country analysis

This paper uses aggregate data from the International Labor Organization and microeconomic data from the European Values Study to quantify gender gaps in entrepreneurship, distinguishing between gender gaps in employership and in self‐employment, and study their main empirical determinants. Our sample consists of 40 European countries and varies broadly in terms of institutional background since it includes several ex‐Communist countries. In the aggregate data we observe a gender gap in employers of 59% and a gender gap in self‐employment of 36%. These gaps have remained roughly constant in the 2000–2017 period, although there are wide differences in both their levels and evolution over time and across countries. Using microeconomic data, we find that the incidence of entrepreneurship, employership, and self‐employment among men is much larger than among women, consistent with the gaps estimated using aggregate data. Our regressions show that these gaps are still sizable even after controlling for a large set of control variables that include marital status, age, education, number of children, wealth, the participation of parents and spouse in entrepreneurship, values toward women, social capital, and prior unemployment. We identify important differences between the determinants of these gaps in ex‐Communist countries and in high‐income ones.     

Saving and the intra-household distribution of income: an empirical investigation

This paper presents an empirical analysis of the relationship between household saving and the distribution of income within the household. Various theoretical reasons why the level of saving might depend on the latter are given. Some of these can be rationalized within the usual “unitary” model of household decision but others recognize explicitly that different members of the household may have different preferences about how much to save.Particular attention is paid to saving for retirement since the facts that wives are, on average, younger than their husbands and women have longer life expectancies means that wives typically anticipate a longer retirement period than their husbands. Thus wives may prefer to save more for retirement than their husbands.The empirical analysis uses a sample of Canadian households from five Family Expenditure Surveys. These surveys include measures of financial saving as well saving in retirement accounts. After accounting for many of the other influences on saving (for example: age, household composition, occupation and education levels but not household income) we find some effects of the intra-household distribution of income on savings rates. The parameter estimates suggest that the household saving rate decreases with the share of the wife in household income.     

Subjective well-being in China: direct and indirect effects of rural-to-urban migrant status

The purpose of this article is to provide a recent investigation on the determinants of subjective well-being among Chinese adults, with particular emphasis on internal migrants who hold a rural hukou and have settled in cities. Based on a sample of 7846 adults stemming from the 2011 wave of CHNS survey, we estimate different happiness functions using ordered probit regressions. We first confirm the influence of traditional demographic and socioeconomic characteristics (i.e. age, marital status, gender, illness/injury, income, and education). Second, our results emphasize the importance of taking into account regional differences, but also the positive impact of leisure time and social connections. Finally, our results highlight that being a rural-to-urban migrant is significantly associated with a decrease in the probability of reporting good or very good life satisfaction. We show that this relationship seems to be shaped by direct and indirect effects, and we identify the mediating role of regional patterns and social relations.     

Consumption and Wealth in Australia

This paper examines the relationship between consumption and wealth in Australia. We find a steady-state relationship between non-durables consumption, labour income and aggregate household wealth for the period 1988–1999. We also find that changes in both non-financial and financial assets have significant but different short-run and long-run effects in dynamic consumption models. Finally, we place our results within the broader empirical literature and examine whether they are consistent with standard theories of consumption.     

Rhythms and cycles in happiness

This study analyses time-dependent rhythms in happiness in three aspects. We show that the Sunday neurosis exists exclusively for men with a medium level of education and both men and women with high levels of education. Men with high levels of education may even experience a weekend neurosis. This study is the first to test for intra-monthly rhythms and to demonstrate that men with a lower educational background may suffer from negative effects on happiness towards the end of the month, potentially because of liquidity problems. The study is also the first to demonstrate that happiness exhibits seasonal effects over the annual period, depending on gender and education.     

What do fiscal stimulus packages mean for household debt?

We study the links between fiscal stimulus packages during times of crisis and households' liabilities. We do so by using household-level data on income and liabilities from the Consumer Expenditure Survey, and estimating an empirical model along those in the literature on the consumption effects of these packages. We find that receiving a check from the government tends to translate into a reduction in outstanding liabilities for American households. This effect is robust to controlling for income levels and household size. The effects are driven by households whose income is below the median and by those who remain employed during the crisis.     

Taking down the wall: Transition and inequality

In this article, we investigate the main determinants of income inequality in the transition countries of Central and Eastern Europe and the Commonwealth of Independent States during the period 1990–2018. To this end, we address a major methodological challenge that lies at the core of the cross‐country literature on income inequality: the potential endogeneity of income per capita, which is largely ignored by most empirical studies. We adopt a two‐pronged empirical strategy by (1) using trading partners’ weighted average real GDP as an instrumental variable and (2) estimating the model via the two‐stage least squares approach for static models and the generalized method of moments estimator for dynamic models. Our empirical findings are consistent with the Kuznets curve that illustrates a nonlinear relationship between income inequality and the level of economic development. We also find that the redistributive impact of fiscal policy is statistically insignificant and taxation and government spending appear to have the opposing effects on income inequality in transition economies over the sample period.     

Consumer Capital as the Source of Happiness: The Missing Economic Theory Underlying the Income-Happiness Paradox

Self-reported happiness does not generally increase with rising income, as established by Richard Easterlin. We argue that the current debate in economics about the income-happiness paradox has paid too little attention to the theoretical foundation of the expected positive relation between income and happiness, seeking an empirical resolution through better data and more elaborate estimating equations instead. We return to the history of economics and revisit the contributions of Irving Fisher and Kenneth Boulding for the missing economic theory that underlies the income-happiness paradox. According to both Fisher and Boulding, “consumer capital” is the ultimate source of welfare, whereby consumer capital is defined as an accumulated stock of tangible and intangible instruments that yield a stream of services over their useful life. In the view of Fisher and Boulding, it is the utilization of this capital stock that renders happiness to individuals. Moreover, income that pays for the goods of consumption can be a “bad,” reflecting the cost of maintaining the consumer capital stock. Therefore, Fisher and Boulding’s insights bring a new perspective to the Easterlin paradox, showing that the empirical finding that rising income contributes only little, if anything, to levels of happiness has been overemphasized at the expense of the theoretically more relevant relation between consumer capital and happiness, and the exact role of income therein.     

On the determinants of inequality in Bosnia and Herzegovina

We provide empirical evidence on the determinants of income inequality in Bosnia and Herzegovina after the civil war. To do this, we use a an ordered probit approach and take advantage of the first post‐war household survey for the country which sheds some light on the influence of regional differences as well as household characteristics on income quintile determination. With respect to the former, we find large income differences between the two entities in the country, the Federation and Republika Srpska. Such income differences are also noticeable inside entities. On the latter, there are some signs that education, experience, and employment, among others, may help reduce the probability of income decline. Our results are robust to changes of specification as shown by applying a formal sensitivity analysis. JEL classification: O15, O10, I30.     

Wage,income and consumption inequality in Japan, 1981–2008: From boom to lost decades

In this paper we document the main features of the distributions of wages, earnings, consumption and wealth in Japan since the early 1980s using four main data sources: the Basic Survey on Wage Structure (BSWS), the Family Income and Expenditure Survey (FIES), the National Survey of Family Income and Expenditure (NSFIE) and the Japanese Panel Survey of Consumers (JPSC). We present an empirical analysis of inequality that specifically considers the path from individual wages and earnings, to household earnings, after-tax income, and finally consumption. We find that household earnings inequality rose substantially over this period. This rise is made up of two distinct episodes: from 1981 to 1996 all incomes rose, but they rose faster at higher percentiles; from 1996 to 2008 incomes above the 50th percentile remained flat but they fell at and below the 50th percentile. Inequality in disposable income and in consumption also rose over this period but to a lesser extent, suggesting taxes and transfers as well as insurance channels available to households helped to insulate household consumption from shocks to wages. We find the same pattern in inequality trends when we look over the life cycle of households as we do over time in the economy. Additionally we find that there are notable differences in the inequality trends for wages and hours between men and women over this period.     

Exploring the link between household debt and income inequality: an asymmetric approach

We investigate the relationship between household debt and income inequality in the USA, allowing for asymmetry, using data over the period 1913–2008. We find evidence of an asymmetric cointegration between household debt and inequality for different regimes. Our results indicate household debt only responds to positive changes in income inequality, while there is no evidence of falling inequality significantly affecting household debt. The presence of this asymmetry provides further empirical insights into the emerging literature on household debt and inequality.     

Income comparison and happiness: The role of fair income distribution

Relative income gap is one of the most popular approaches for explaining the income–happiness relationship. We argue in this article that when people compare their incomes, they care about distributional fairness more than relative income disparity. It is difficult for us to explain China's income–happiness paradox if we simply compare the income gap and do not explore the income‐generation process leading to income inequality. We therefore employ an approach based on a responsibility‐sensitive theory of justice that decomposes individual income into fair and unfair components. As a proxy for distributional unfairness, unfair income is considered the main source of unhappiness. Using data from the Chinese Household Income Project survey, we find strong support for the negative relationship between income unfairness and happiness. We also find a significantly positive relationship between the relative income gap and income unfairness, which leads us to consider the income comparison hypothesis as the explanation for the income–happiness paradox in a new light. Sensitivity analyses confirm the robustness of our results.     

Does Off-Farm Wage Employment Make Women in Rural Senegal Happy?

This paper investigates the impact of wage employment on women’s well-being in the Senegalese horticultural export industry. It uses a subjective well-being approach, based on self-reported happiness, to capture income and non-income aspects of employment. The study uses original survey data from 2013 for the Saint-Louis region in Senegal and an instrumental variable approach, supported by information from focus group discussions. It finds that women’s employment improves subjective well-being for the poorest women, but not for women whose household income is above the poverty threshold. Women’s employment improves women’s happiness through an income effect, as it leads to higher income levels and improved living standards, but the non-income effects reduce women’s happiness. This negative effect is related to a higher workload and low job satisfaction due to unfulfilled expectations. The positive income effect outweighs these negative non-income effects for poor women but not for relatively wealthier women.     

Deprivation of Women and Men Living in a Couple: Sharing or Unequal Division?

In standard poverty analyses, all household members are assumed to share equal living conditions. Though a few national studies exist, this paper is the first to present empirical evidence on this issue for the EU, using the 2015 wave of the EU Statistics on Income and Living Conditions. We map the extent of intra-couple inequality in deprivation, and analyze its determinants. We find that for most items, the gender difference in lack between partners, though generally small, is significant and at the disadvantage of women. When aggregating the individual items into a deprivation scale, couples where the number of enforced lacks is higher for the woman (9.2 percent) are (significantly) more numerous than couples where the man is disadvantaged (6.5 percent), at the EU level. Econometric analysis shows that the work status of the partners and their relative contribution to the joint income are important determinants of the intra-couple gender deprivation gap.     

On measuring the utilization rate of employed labour

This paper deals with the factors that influence plans to retire from the labour force. We use a theoretical model to explain the empirical findings from a bivariate probit model relating economic, demographic, and social characteristics to retirement plans for over 7000 women and men between the ages of 40 and 64. The results of the analysis concerning retirement intentions suggest that personal, economic and household characteristics are more important determinants of retirement plans for women than men.     

Hourly wage rate and taxable labor income responsiveness to changes in marginal tax rates

Recently, a voluminous literature estimating the taxable income elasticity has emerged as an important field in empirical public economics. However, to a large extent it is still unknown how the hourly wage rate, an important component of taxable income, reacts to changes in marginal tax rates. In this study we use a rich panel data set and a sequence of tax reforms that took place in Sweden during the 1980s to estimate the elasticity of the hourly wage rate as well as the taxable labor income elasticity with respect to the net-of-tax rate. We also estimate elasticities with respect to the non-labor income in a way that is novel in the literature. While carefully accounting for the endogeneity of marginal tax rates we find a statistically significant response in wage rates both among married men and women. The estimates of the hourly wage rate elasticity with respect to the net-of-tax rate fall in the range of 0.14–0.16 for males and 0.41–0.57 for females, whereas the corresponding taxable labor income elasticity estimates hover between 0.19–0.21 for males and 0.96–1.44 for women. Moreover, for men we find that the taxable labor income elasticity with respect to non-labor income is statistically significant; the point estimate being ? 0.07. This implies that the compensated taxable labor income elasticity is about 5 percentage points higher than the uncompensated one. In general, we consider the estimates for males to be more certain and robust than the estimates for females.     

Poverty Dynamics,Violent Conflict,and Convergence in Rwanda

This paper analyzes the poverty impact of the violent events that affected Rwanda in the 1990s. The main objective of the paper is to identify systematically potential mechanisms linking violent conflict with changes in poverty across provinces and households in Rwanda before and after a decade of violence. In accordance with emerging literature on the long‐term economic effects of violent conflict, we find empirical evidence for economic convergence between richer and poorer Rwandan provinces and households following the conflict shocks. Using a small but unique panel of households surveyed before and after the conflict period, we find that households whose house was destroyed or who lost land ran a higher risk of falling into poverty. We do not find much evidence for an economic effect of violent deaths at the household level due to substitution effects of labor within the household. Non‐violent deaths however seem to increase income per adult equivalent for the survivors. Results are shown to be robust to sample selection and IV models.     

Gender roles,labour market participation and household income position

In empirical research on labour supply behaviour, variables like age, education or the household's financial situation as well as economic and demographic characteristics, social attitudes and gender role schemes are believed to influence the annual working hours. This paper starts from the assumption that these determinants work differently according to the poverty level of the household in which the individual lives. Using data from the German Socio-Economic Panel (GSOEP), the paper empirically tests this hypothesis for women and men living in households with a disposable income above the poverty line and of those living in poor households. The results of multiple regression analysis show traditional gender role patterns in labour supply decisions, but only for persons in households with an income above the poverty line.