Empirical Linkages between Good Government and National Well-being

By: John F. Helliwell
Haifang Huang
Shawn Grover
Shun Wang

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20686&r=ltv

This paper first reviews existing studies of the links between good governance and subjective well-being. It then brings together the largest available sets of national-level measures of the quality of governance to assess the extent to which they contribute to explaining the levels and changes in life evaluations in 157 countries over the years 2005-2012, using data from the Gallup World Poll. The results show not just that people are more satisfied with their lives in countries with better governance quality, but also that actual changes in governance quality since 2005 have led to large changes in the quality of life. For example, the ten-most-improved countries, in terms of delivery quality changes between 2005 and 2012, when compared to the ten countries with most worsened delivery quality, are estimated to have thereby increased average life evaluations by as much as would be produced by a 40% increase in per capita incomes. The results also confirm earlier findings that the delivery quality of government services generally dominates democratic quality in supporting better lives. The situation changes as development proceeds, with democratic quality having a positive influence among countries that have already achieved higher quality of service delivery.

JEL: H11 I31 P52

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‘The Choice Agenda’ in European Health Systems: The Role of ‘Middle Class Demands’

By: Joan Costa-i-Font
Valentina Zigante

URL: http://d.repec.org/n?u=RePEc:eiq:eileqs:82&r=ltv

We examine the role of political economy drivers of the choice agenda in European health systems including middle class electoral support. Building on the reform trajectories and current institutional framework in eight western European countries where there have been significant choice reforms, we explore the preferences for choice and health system satisfaction in those countries. We find provider choice to be supported by middle class demands and health systems satisfaction, but weak evidence of other alternative political motivations for the expansion of provider choice. We conclude that in addition to efficiency improvements, provider choice is largely correlated with the demands for choice among the middle class. The provider choice agenda responds as much to political economy consideration as it does to efficiency arguments.

Keywords: provider choice, health system satisfaction, tax funded health systems, middle class demands

World Income Inequality Databases: An Assessment of WIID and SWIID

By: Jenkins, Stephen P. (London School of Economics)

URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp8501&r=ltv

This article assesses two secondary data compilations about income inequality – the World Income Inequality Database (WIIDv2c), and the Standardized World Income Inequality Database (SWIIDv4.0) which is based on WIID but with all observations multiply-imputed. WIID and SWIID are convenient and accessible sources for researchers seeking cross-national data with global coverage for relatively long time periods. Against these benefits must be set costs arising from lack of data comparability and quality and also, in the case of SWIID, questions about its imputation model. WIID and SWIID users need to recognize this benefit-cost trade-off and ensure their substantive conclusions are robust to potential data problems. I provide detailed description of the nature and contents of both sources plus illustrative regression analysis. From a data issues perspective, I recommend WIID over SWIID, though my support for use of WIID is conditional.

Keywords: WIID, imputation, global inequality, inequality, Gini, SWIID

JEL: C81 C82 D31

Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data

By: Saez, Emmanuel
Zucman, Gabriel

URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10227&r=ltv

This paper combines income tax returns with Flow of Funds data to estimate the distribution of household wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations’ tax records. Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012—a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.

Keywords: household wealth; income tax; wealth inequality; wealth-holders

JEL: H2 N32

The Emotional Consequences of Donation Opportunities

By: Lara B. Aknin
Guy Mayraz
John F. Helliwell

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20696&r=ltv

Charities often circulate widespread donation appeals to garner support for campaigns, but what impact do these campaigns have on the well-being of individuals who choose to donate, those who choose not to donate, and the entire group exposed to the campaign? Here we investigate these questions by exploring the changes in affect reported by individuals who donate in response to a charitable request and those who do not. We also look at the change in affect reported by the entire sample to measure the net impact of the donation request. Results reveal that large donors experience hedonic boosts from their charitable actions, and the substantial fraction of large donors translates to a net positive influence on the well-being of the entire sample. Thus, under certain conditions, donation opportunities can enable people to help others while also increasing the overall well-being of the population of potential donors.

JEL: C91 D60 D64 H3

Trust and the Welfare State: the Twin Peaks Curve

By: Algan, Yann
Cahuc, Pierre
Sangnier, Marc

URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10061&r=ltv

We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.

Keywords: trust; welfare states

JEL: H1

Adaptation to Poverty in Long-Run Panel Data

By: Clark, Andrew E. (Paris School of Economics)
D’Ambrosio, Conchita (University of Luxembourg)
Ghislandi, Simone (Bocconi University)

URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp8656&r=ltv

We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.

Keywords: income, poverty, subjective well-being, adaptation, SOEP

JEL: I31 D60

Early Child Care and Child Outcomes: The Role of Grandparents

By: Del Boca, Daniela (University of Turin)
Piazzalunga, Daniela (University of Turin)
Pronzato, Chiara D. (University of Turin)

URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp8565&r=ltv

In this paper, we focus on the impact of early grandparents’ care on child cognitive outcomes, in the short and medium term, using data from the Millennium Cohort Study (UK). Compared with children looked after in a formal care centre, children cared by grandparents (as well as parents) are better in naming objects, but worse in tests concerning basic concepts development, problem-solving, mathematical concepts and constructing ability. In order to assess a causal link between early care and child outcomes, we employ panel methods and instrumental variables techniques that confirm that grandparental care matters more for naming ability while formal care is more important for problem-solving ability and basic concepts development. These results hide strong heterogeneities: on the one hand, the positive association between grandparents’ care and child outcomes is stronger for children in more advantaged households; on the other hand, the negative association is significant only for children in more disadvantaged households.

Keywords: grandparents, childcare, child cognitive outcomes

JEL: J13 D1 I21

The Value of Postsecondary Credentials in the Labor Market: An Experimental Study

By: David J. Deming Noam Yuchtman Amira Abulafi Claudia Goldin Lawrence F. Katz

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20528&r=ltv

We study employers’ perceptions of postsecondary degrees using a field experiment. We randomly assign the sector and selectivity of institution to fictitious resumes and send them to real vacancy postings on a large online job board. According to our results, a bachelor’s degree in business from a for-profit “online” institution is 22 percent less likely to receive a callback than a similar degree from a non-selective public institution. Degrees from selective public institutions are relatively more likely to receive callbacks from employers posting higher-salaried jobs, suggesting that employers value college quality and the likelihood of a successful match when contacting applicants.

JEL: I21 J24

Youth unemployment in the OECD: The role of institutions

By: Sachs, Andreas
Smolny, Werner

URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:14080&r=ltv

This paper analyzes the role of labor market institutions for youth unemployment, as contrasted to total unemployment. The empirical results are basically consistent with an insider view of labor market institutions. Labor market institutions tend to protect (older) employees but might harm (young) entrants. Remarkable is especially the significant and very high effect of employment protection for regular jobs on youth unemployment. In addition, the combined effects of powerful unions and a coordinated wage bargaining system are beneficial for older people and detrimental to youth. Finally, the paper establishes significant labor supply effects and effects of the education system on youth and total unemployment.

Keywords: Youth unemployment,labor market institutions,age-specific unemployment

JEL: E02 E24 J21 J68