Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US

Bargain, Olivier ; Decoster, André ; Dolls, Mathias ; Neumann, Dirk ; Peichl, Andreas ; Siegloch, Sebastian

URL: https://www.iser.essex.ac.uk/research/publications...
Additional URL: https://ideas.repec.org/p/ese/emodwp/em5-11.html
Document Type: Working paper
Year of publication: 2011
The title of a journal, publication series: EUROMOD Working Papers
Volume: EM5/11
Place of publication: Essex
Publishing house: Institute for Social and Economic Research
Related URLs:
Publication language: English
Institution: School of Law and Economics > Soziale Sicherung (Siegloch 2018-2022)
School of Law and Economics > VWL, Quantitative Finanzwissenschaft (Peichl 2013-2017)
Subject: 330 Economics
Classification: JEL: C35 , D63 , H24 , H31 , J22,
Keywords (English): welfare measures , preference heterogeneity , labor supply , Beyond GDP
Abstract: Following the report of the Stiglitz Commission, measuring and comparing well-being across countries has gained renewed interest. Yet, analyses that go beyond income and incorporate non-market dimensions of welfare most often rely on the assumption of identical preferences to avoid the difficulties related to interpersonal comparisons. In this paper, we suggest an international comparison based on individual welfare rankings that fully retain preference heterogeneity. Focusing on the consumption-leisure trade-off, we estimate discrete choice labor supply models using harmonized microdata for 11 European countries and the US. We retrieve preference heterogeneity within and across countries and analyze several welfare criteria which take into account that differences in income are partly due to differences in tastes. The resulting welfare rankings clearly depend on the normative treatment of preference heterogeneity with alternative metrics. We show that these differences can indeed be explained by estimated preference heterogeneity across countries – rather than demographic composition.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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