Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20608
Authors: 
Clark, Andrew E.
Etilé, Fabrice
Postel-Vinay, Fabien
Senik, Claudia
van der Straeten, Karine
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1339
Abstract: 
This paper models the relationship between income and reported well-being using latent class techniques applied to panel data from twelve European countries. Introducing both intercept and slope heterogeneity into this relationship, we strongly reject the hypothesis that individuals transform income into well-being in the same way. We show that both individual characteristics and country of residence are strong predictors of the four classes we identify. We expect that differences in the marginal effect of income on well-being across classes will be reflected in both behaviour and preferences for redistribution.
Subjects: 
income
utility
well-being
heterogeneity
latent class
JEL: 
C23
I30
C14
Document Type: 
Working Paper

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