The Marginal Income Effect of Education on Happiness: Estimating the Direct and Indirect Effects of Compulsory Schooling on Well-Being in Australia

40 Pages Posted: 3 May 2013 Last revised: 31 May 2013

See all articles by Nattavudh Powdthavee

Nattavudh Powdthavee

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Warn N. Lekfuangfu

Universidad Carlos III de Madrid; CEP, London School of Economics; University College London - CReAM - Centre for Research and Analysis of Migration

Mark Wooden

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; IZA Institute of Labor Economics

Date Written: April 2013

Abstract

Many economists and educators favour public support for education on the premise that education improves the overall well-being of citizens. However, little is known about the causal pathways through which education shapes people’s subjective well-being (SWB). This paper explores the direct and indirect well-being effects of extra schooling induced through compulsory schooling laws in Australia. We find the net effect of schooling on later SWB to be positive, though this effect is larger and statistically more robust for men than for women. We then show that the compulsory schooling effect on male’s SWB is indirect and is mediated through income.

Keywords: schooling, indirect effect, well-being, mental health, windfall income, HILDA Survey

JEL Classification: I20, I32, C36

Suggested Citation

Powdthavee, Nattavudh and Lekfuangfu, Warn N. and Wooden, Mark, The Marginal Income Effect of Education on Happiness: Estimating the Direct and Indirect Effects of Compulsory Schooling on Well-Being in Australia (April 2013). Melbourne Institute Working Paper No. 16/13, Available at SSRN: https://ssrn.com/abstract=2259323 or http://dx.doi.org/10.2139/ssrn.2259323

Nattavudh Powdthavee (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
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Warn N. Lekfuangfu

Universidad Carlos III de Madrid ( email )

CEP, London School of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://https://sites.google.com/site/warnlekfuangfu/

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

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London, WC1H 0AX
United Kingdom

Mark Wooden

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

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Parkville, Victoria 3010
Australia

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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