Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 548: Life Satisfaction in Urban Ethiopia: Trends and determinants
Yonas Alem () and Gunnar Köhlin ()
Additional contact information
Yonas Alem: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O.Box 640, SE 40530 GÖTEBORG, Sweden
Gunnar Köhlin: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Abstract: Most studies of subjective well-being in developing countries use cross-sectional data, which makes it difficult to control for unobserved individual heterogeneity. In this paper, we use three rounds of panel data and robust non-linear panel data models to investigate the trends and determinants of life satisfaction in urban Ethiopia. Although Ethiopia exhibited rapid economic growth during the analyzed period, the average reported level of life satisfaction declined. Regression results show that despite the significant difference between urban Ethiopia and industrialized countries in terms of economic and social conditions, many of the determinants of life satisfaction are similar. This includes, age, marital status, health, unemployment, economic status, relative position and educational achievement. Our results also indicate that both individual (respondent) and household level versions of these variables are important determinants of life satisfaction. This provides some evidence on the interdependence of individual and household subjective well-being in developing countries. The fact that rapid economic growth was accompanied by a decline in citizens’ average reported level of life satisfaction brings the pro-poorness of the recent economic growth in Ethiopia into question. We argue that economic growth that trickles down to the poor and ensures creation of stable jobs would be welfare enhancing.
Keywords: Life Satisfaction; Urban Ethiopia; Economic Growth; Correlated Random-Effects Ordered Probit.
31 pages, December 19, 2012
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