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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7057

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Labor Contracts ; Entrepreneurship ; Measurement and Analysis of Poverty ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: subjective wellbeing ; mixed ordered probit ; self-employment ; informality ; developing country labor markets ; Africa ; Zufriedenheit ; Selbstständige ; Informeller Sektor ; Berufswahl ; Afrika ; Ghana

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Falco, Paolo ; Maloney, William F. ; Rijkers, Bob ; Sarrias, Mauricio
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/69461
• Last update: 10.03.2025, 11:45 AM CET