Money Does Matter ! Evidence from Increasing Real Incomes and Life Satisfaction in East Germany following Reunification

@inproceedings{Frijters2004MoneyDM,
  title={Money Does Matter ! Evidence from Increasing Real Incomes and Life Satisfaction in East Germany following Reunification},
  author={Paul Frijters and John P. Haisken-DeNew and Michael A. Shields},
  year={2004}
}
In this paper we investigate how life satisfaction (or happiness) is affected by a substantial increase in real income. Our context is East Germany in the decade following reunification, and we implement a new fixed-effect estimator for ordinal life satisfaction and develop a decomposition approach that accounts for new entrants and panel attrition. Using data from the German SocioEconomic Panel we find that average life satisfaction in East Germany increased by around 20% between 1991 and 2001… CONTINUE READING
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