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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6102

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Fiscal Policies and Behavior of Economic Agents: Household ; Time Allocation and Labor Supply
• Subject: welfare measures ; preference heterogeneity ; labor supply ; Beyond GDP ; Wohlfahrtsanalyse ; Sozialer Indikator ; Präferenztheorie ; Arbeitsangebot ; Freizeit ; Kulturelle Identität ; Schätzung ; Europa ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Decoster, André ; Dolls, Mathias ; Neumann, Dirk ; Peichl, Andreas ; Siegloch, Sebastian
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/58882
• URN: urn:nbn:de:101:1-201111213404
• Last update: 10.03.2025, 11:45 AM CET