Heterogeneity in subjective wellbeing : an application to occupational allocation in Africa, Vol. 1 of 1

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Heterogeneity in subjective wellbeing : an application to occupational allocation in Africa

Author:	Falco, Paolo; Maloney, William F.; Rijkers, Bob; Sarrias, Mauricio;	Collection Title:	Policy Research working paper ; no. WPS 6244
Country:	Africa;	Date Stored:	2012/10/17
Document Date:	2012/10/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Industry and trade
Rel. Proj ID:	1W-Micro Dynamics And Macro Performance -- -- P104056;	Region:	Africa
Report Number:	WPS6244	Sub Sectors:	General industry and trade sector
SubTopics:	Work & Working Conditions; Labor Management and Relations; Labor Markets; Labor Policies; Educational Policy and Planning	TF No/Name:	TF058171-INVESTMENT CLIMATE'S CONTRIBUTION TO GROWTH THROUGH FIRM DYNAMICS AND A; TF090797-MACROECONOMIC EFFECTS OF ALLOCATIVE EFFICIENCY; TF097044-Women in Crisis; TF010008-KCP II - Industrial structure, productivity, growth and welfare; TF094566-KCP II COMPARABLE DISAGGREGATED CENSUS DATA ACROSS DEVELOPING COUNTRIE
Volume No:	1 of 1

Summary: Using an extraordinarily rich panel dataset from Ghana, this paper explores the nature of self-employment and informality in developing countries through the analysis of self-reported happiness with work and life. Subjective job satisfaction measures allow assessment of the relative desirability of different jobs in ways that, conditional wage comparisons cannot. By exploiting recent advances in mixed (random parameter) ordered probit models, the distribution of subjective well-being across sectors of employment is quantified. There is little evidence for the overall inferiority of the small firm informal sector: there is not a robust average satisfaction premium for formal work vs. self-employment or informal salaried work, and owners of informal firms that employ others are on average significantly happier than workers in the formal private sector. Moreover, the estimated distribution of parameters predicting satisfaction reveal substantial heterogeneity in subjective well-being within sectors that conventional fixed parameter models, such as standard ordered probit models, cannot detect: Whatever the average satisfaction premium in a sector, all job categories contain both relatively happy and disgruntled workers. Specifically, roughly 67, 50, 40 and 59 percent prefer being a small-firm employer, sole proprietor, informal salaried, civic worker respectively, than 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 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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