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Citation Information

Type Journal Article - Journal of Economic Behavior & Organization
Title Heterogeneity in subjective wellbeing: An application to occupational allocation in Africa
Volume 111
Publication (Day/Month/Year) 2015
Page numbers 137-153
URL https://www.econstor.eu/bitstream/10419/69461/1/732549809.pdf
By exploiting recent advances in mixed (stochastic parameter) ordered probit estimators and
a unique longitudinal dataset from Ghana, this paper examines the distribution of subjective
wellbeing across sectors of employment and offers insights into the functioning of developing
country labor markets. We find little evidence for the overall inferiority of the small firm
informal sector: there is not a robust average satisfaction premium for formal work vis a vis
self-employment or informal salaried work and, in fact, informal firm owners who employ
others are on average significantly happier than formal workers. Moreover, the estimated
underlying random parameter distributions unveil substantial latent heterogeneity in
subjective wellbeing around the central tendency that fixed parameter models cannot detect.
All job categories contain both relatively happy and disgruntled workers. Concretely, roughly
67%, 50%, 40% and 59% prefer being a small firm employer, sole proprietor, informal
salaried, and civic worker respectively, to formal work. Hence, there is a high degree of
overlap in the distribution of satisfaction across sectors. The results are robust to the
inclusion of fixed effects, and using alternate measures of satisfaction. Job characteristics,
self-perceived autonomy and experimentally elicited measures of attitudes toward risk do not
appear to explain these distributional patterns.

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