The effects of education on spouses’ satisfaction in Europe

Abstract

This article identifies the effects of both own and spouses' education levels on individual economic satisfaction for European households. To that end, it estimates several specifications based on the family collective approach, for each of the 14 EU countries, by using the eight waves of the European Community Household Panel, 1994–2001. After demonstrating that the IV Hausman–Taylor procedure is the selected estimation method in the majority of cases, the empirical results show that male and female income satisfaction significantly increases when the husband achieves higher education qualifications in the majority of European countries. However, the positive effect of the wife's higher education on female income satisfaction only appears in a very limited number of countries. Additionally, increases in individual wage and nonwage incomes generally lead to higher satisfaction levels.

Acknowledgements

This article was partially written while José Alberto Molina was Visiting Fellow at the Department of Economics of the University of Warwick (UK), to which he would like to express his thanks for the hospitality and facilities provided. An earlier version of this article has been presented at the Spanish Economic Analysis Meeting, 2004 (Pamplona, Spain), as well as at the Department of Economics of the University of Warwick, 2005 (Warwick, UK), with all the comments made by the participants, particularly those of Ian Walker, being highly appreciated. Moreover, the authors would like to express their thanks to one anonymous referee for helpful comments and suggestions. Thanks are due also for the financial support provided by the Spanish Ministry of Education and Science and FEDER (Project SEC2005-06522), by the BBVA Foundation and the DGA. The usual disclaimer applies.

Notes

¹ The ECHP is an extensive, sample-based panel survey in which the same households and individuals are interviewed annually. The data come from a standardized questionnaire and are designed to be cross-nationally comparable (Peracchi, 2002).

² Given the ordinal nature of the dependent variable on individual satisfaction, an appropriate regression model would be an ordered probit. However, while a random-effects ordered probit model is available in standard statistical software packages (Ferrer-i-Carbonell and Van Praag, 2003; Schwarze, 2004; Winkelmann, 2005), the fixed-effects ordered probit estimator is not. This is why the present article uses as approximations both random-effects and fixed-effects regression models, which are perfectly comparable by using habitual tests (D’Ambrosio and Frick, 2004; Ferrer-i-Carbonell and Frijters, 2004; Graham et al., 2004).

³ The recent work by Baltagi et al. (2003) provides information on the suitability of the Hausman–Taylor procedure in a general framework where panel data are available and some regressors are correlated with the individual effects.

⁴ See, for details, Hausman and Taylor (1981), Wooldridge (2002) and Baltagi et al. (2003).

⁵ The 8.0 version of Stata includes the Hausman–Taylor procedure and is used to obtain the estimates presented in this article.