The Optimal Choice of a Reference Standard for Income Comparisons: Indirect Evidence from Immigrants' Return Visits

I propose two new tests of Falk and Knell's (2004) prediction that individuals' reference income increases with ability. To overcome the difficulty that the reference incomeis not observed in existing large data sets, I extend Falk and Knell's model to establish a link between immigrants' reference income and their return visits to their countries of origin. I derive the (arguably counter-intuitive) predictions that more educated immigrants are less likely to have returned to their country of origin for a visit, and that they are more likely to have difficulty feeling at home when they do return for a visit. Both predictions are confirmed on four waves of data from the German Socio-Economic Panel. The estimated marginal effects are statistically significant, but rather small in size.reference standard, social comparison, immigration, Germany

Does immigration weaken natives' support for the welfare state? Evidence from Germany

Using data from the 1997 and 2002 waves of the German Socio-Economic Panel and from official statistics, I study whether natives are less supportive of state help for the unemployed in regions where the share of foreigners among the unemployed is high. Unlike previous studies, I use individual-level panel data, which allows a more convincing identification of a causal effect. I find that the negative bivariate association is mainly driven by observed individual differences such as East German origin or income. While there remains some evidence of a negative association even after adjusting for individual differences (including time-invariant unobserved differences), the association is weak compared to the association with other variables such as income, self-employment, or East German origin. --redistribution,social security,welfare state,immigration,ethnic diversity,Germany,cluster-robust standard errors,two-way clustering

The optimal choice of a reference standard for income comparisons: indirect evidence from immigrants' return visits

I propose two new tests of Falk and Knell's (2004)prediction that individuals'reference income increases with ability. To overcome the difficulty that the reference income is not observed in existing large data sets, I extend Falk and Knell's model to establish a link between immigrants' reference income and their return visits to their countries of origin. I derive the (arguably counter-intuitive) predictions that more educated immigrants are less likely to have returned to their country of origin for a visit, and that they are more likely to have difficulty feeling at home when they do return for a visit. Both predictions are confirmed on four waves of data from the German Socio-Economic Panel. The estimated marginal effects are statistically significant, but rather small in size. --reference standard,social comparison,immigration,Germany

Does Immigration Weaken Natives' Support for the Welfare State?: Evidence from Germany

Using data from the 1997 and 2002 waves of the German Socio-Economic Panel and from official statistics, I study whether natives are less supportive of state help for the unemployed in regions where the share of foreigners among the unemployed is high. Unlike previous studies, I use individual-level panel data, which allows a more convincing identification of a causal effect. I find that the negative bivariate association is mainly driven by observed individual differences such as East German origin or income. While there remains some evidence of a negative association even after adjusting for individual differences (including time-invariant unobserved differences), the association is weak compared to the association with other variables such as income, self-employment, or East German origin.redistribution, social security, welfare state, immigration, ethnic diversity, Germany, cluster-robust standard errors, two-way clustering

Short-run fertility effects of parental leave benefits : evidence from a structural model

Based on a structural model of fertility and female labour force supply with unobserved heterogeneity and state dependence, we evaluate the 2007 reform of parental leave benefits in Germany, which replaced a flat, means-tested benefit by a generous earnings-related transfer. The model predicts a short-term fertility effect of about 4%, which is consistent with recent quasi-experimental evidence. The fertility effect is strongest for first births and increases with income. We use the model for a number of counterfactual policy experiments in which we vary the generosity of parental leave benefits

The optimal choice of a reference standard for income comparisons : indirect evidence from immigrants return visits

I propose two new tests of Falk and Knell’s (2004) prediction that individuals’ reference income increases with ability. To overcome the difficulty that the reference income is not observed in existing large data sets, I extend Falk and Knell’s model to establish a link between immigrants’ reference income and their return visits to their countries of origin. I derive the (arguably counter-intuitive) predictions that more educated immigrants are less likely to have returned to their country of origin for a visit, and that they are more likely to have difficulty feeling at home when they do return for a visit. Both predictions are confirmed on four waves of data from the German Socio-Economic Panel. The estimated marginal effects are statistically significant, but rather small in size

Does immigration weaken natives support for the welfare state? : evidence from Germany

Using data from the 1997 and 2002 waves of the German Socio-Economic Panel and from official statistics, I study whether natives are less supportive of state help for the unemployed in regions where the share of foreigners among the unemployed is high. Unlike previous studies, I use individual-level panel data, which allows a more convincing identification of a causal effect. I find that the negative bivariate association is mainly driven by observed individual differences such as East German origin or income. While there remains some evidence of a negative association even after adjusting for individual differences (including time-invariant unobserved differences), the association is weak compared to the association with other variables such as income, self-employment, or East German origin

You Can't Be Happier Than Your Wife: Happiness Gaps and Divorce

This paper asks whether the gap in subjective happiness between spouses matters per se, i.e. whether it predicts divorce. We use three panel databases to explore this question. Controlling for the level of life satisfaction of spouses, we find that a higher satisfaction gap, even in the first year of marriage, increases the likelihood of a future separation. We interpret this as the effect of comparisons of well-being between spouses, i.e. aversion to unequal sharing of wellbeing inside couples. To our knowledge, this effect has never been taken into account by existing economic models of the household. The relation between happiness gaps and divorce may be due to the fact that couples which are unable to transfer utility are more at risk than others. It may also be the case that assortative mating in terms of happiness baseline-level reduces the risk of separation. However, we show that assortative mating is not the end of the story. First, our results hold in fixed-effects estimates that take away the effect of the initial quality of the match between spouses: fixed-effects estimates suggest that a widening of the happiness gap over time raises the risk of separation. Second, we uncover an asymmetry in the effect of happiness gaps: couples are more likely to break-up when the difference in life satisfaction is unfavourable to the wife. The information available in the Australian survey reveals that divorces are indeed predominantly initiated by women, and importantly, by women who are unhappier than their husband. Hence, happiness gaps seem to matter to spouses, not only because they reflect a mismatch in terms of baseline happiness, but because they matter as such.Divorce, happiness, comparisons, panel, households, marriage

Ethnic diversity and attitudes towards redistribution: a review of the literature

We review the empirical literature that studies the effect of ethnic diversity on the welfare state and on individual attitudes. The outcome variables that we cover in the survey are on the one hand public spending, and on the other hand individual attitudes and behaviour, including charity spending. We also review the fast-growing literature that uses experiments to study the effects of ethnic diversity. Many of these studies have appeared since the pioneering survey by Alesina and La Ferrara (2005a), and have not been covered by a survey before. --redistribution,social security,welfare state,immigration,ethnic diversity,survey

You can't be happier than your wife: happiness gaps and divorce

This paper asks whether the gap in subjective happiness between spouses matters per se, i.e. whether it predicts divorce. We use three panel databases to explore this question. Controlling for the level of life satisfaction of spouses, we find that a higher satisfaction gap, even in the first year of marriage, increases the likelihood of a future separation. We interpret this as the effect of comparisons of well-being between spouses, i.e. aversion to unequal sharing of well-being inside couples. To our knowledge, this effect has never been taken into account by existing economic models of the household. The relation between happiness gaps and divorce may be due to the fact that couples which are unable to transfer utility are more at risk than others. It may also be the case that assortative mating in terms of happiness baseline-level reduces the risk of separation. However, we show that assortative mating is not the end of the story. First, our results hold in fixed-effects estimates that take away the effect of the initial quality of the match between spouses: fixedeffects estimates suggest that a widening of the happiness gap over time raises the risk of separation. Second, we uncover an asymmetry in the effect of happiness gaps: couples are more likely to break-up when the difference in life satisfaction is unfavourable to the wife. The information available in the Australian survey reveals that divorces are indeed predominantly initiated by women, and importantly, by women who are unhappier than their husband. Hence, happiness gaps seem to matter to spouses, not only because they reflect a mismatch in terms of baseline happiness, but because they matter as such. --divorce,happiness,comparisons,panel, households, marriage