Public Infrastructure and Wages: Public Capital's Role as a Productive Input and Household Amenity

Production function studies typically conclude that public capital plays little role in enhancing productivity. However, others have found that infrastructure and employment growth are positively related. These apparently conflicting results can be reconciled if public capital serves as a household amenity that increases labor supply without dramatically increasing productivity. This study examines the impact of public capital on wages in order to assess whether productivity or amenity effects dominate. For the economy as a whole, the results suggest that highway's strongest role is as a household amenity, however, for the manufacturing sector, the productivity effect of highways appears to dominate.

Relative to What or Whom? The Importance of Norms and Relative Standing to Well-Being in South Africa

Summary Studies of relative standing and subjective well-being (SWB) consistently show a negative correlation between peer income and satisfaction. However, most investigate a single peer group in wealthy country. Using a South African household survey we model SWB using different measures of relative standing. Our results differ from most of the existing literature in two ways. First, they suggest that at low levels of income or expenditure--like most South Africans--the benefit of living among wealthier people outweighs the negatives of being the poorest of a peer group. In addition, we find achievement relative to one's parents is more important than the traditional emphasis on geographic peers.subjective well-being happiness relative income Africa South Africa