Lags and Leads in Life Satisfaction in Korea: When Gender Matters

ABSTRACT

Using detailed longitudinal data from the Korean Labor and Income Panel Study (KLIPS) from 1998 to 2008, this paper finds significant gender differences in impacts as well as adaptation patterns to major life and labor market events in Korea. Men remain on a higher happiness level throughout marriage, while women return to their baseline happiness within only two years. Consequently, men suffer more from divorce and the death of a spouse. This marital gender happiness gap is equivalent to a (husband only) increase of annual per capita household income of approximately US$17,800. The study further finds that men suffer more from unemployment. Results are robust to the inclusion of multiple simultaneous events and the use of different estimators.

KEYWORDS:

• Happiness
• adaptation
• gender gap
• marriage
• life and labor market events

JEL:

• I31
• J12
• J16

NOTES ON CONTRIBUTORS

Robert Rudolf is Assistant Professor at the Division of International Studies of Korea University, Seoul, South Korea. He holds a PhD from the University of Göttingen, Germany, where he was part of Stephan Klasen's Development Economics Research Group between 2007 and 2011. His main research interests include the economics of welfare and development, gender, labor markets, subjective well-being, and poverty/inequality.

Sung-Jin Kang is Professor at the Economics Department of Korea University, Seoul, South Korea. He currently serves as the Vice President for International Affairs at Korea University. He holds a PhD from Stanford University. His major research interests are in behavioral, welfare, and development economics.

ACKNOWLEDGMENTS

This study was supported by a Korea University research grant. We thank the Development Economics Research Group in Göttingen as well as participants of the conference “Market and Happiness” for valuable comments. The paper benefited from discussions with Andrew Clark, Stephan Klasen, Carola Grün, Ingo Geishecker, Maximilian Riedl, and Seo-Young Cho.

Notes

¹ For an overview of the happiness economics literature, see Paul Dolan, Tessa Peasgood, and Mathew White (2008). For policy initiatives, see Ed Diener and Martin E. P. Seligman (2004); Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi (2009); United Nations Development Programme (UNDP; 2010); Organisation for Economic Co-Operation and Development (OECD; 2011a).

² While we are aware that well-being is a broad concept that might refer to a number of different approaches, such as material well-being or Sen's capability approach, we use the terms life satisfaction, happiness, subjective well-being, and well-being interchangeably throughout this study.

³ Feminist economists have been critical about the use of SWB measures in the past. As Amartya Sen (1999) argued at the early stages of happiness economics, a woman living in extreme poverty can still report to be satisfied with her life, since she has never known anything else. Feminist economics has thus often preferred to use capabilities to measure well-being as freedom from physical, social, and psychological constraints. However, after a decade of strong advancements in SWB methods and applications, recently feminist economists acknowledged that subjective measures might be valuable of their own right. As Marina Della Giusta, Sarah Louise Jewell, and Uma S. Kambhampati (2011) note, two individuals might have the same capabilities but still experience differences in happiness. Martha C. Nussbaum (2000) and Des Gasper (2007) have further argued that emotions and felt well-being should be included in the capability framework as important indicators of human development. The entire chain from resources to capabilities and from capabilities to well-being and life satisfaction should be regarded. Angus Deaton (2008), using data for 132 countries from the Gallup World Poll, finds that average life satisfaction is strongly related to national per-capita income in cross-country comparisons. He finds that each doubling of income is associated with approximately two-thirds of a unit increase in life satisfaction on a scale from 0 to 10. Hence, since experienced happiness is determined by both largely persistent personality traits and changing socioeconomic factors, Sen (1999) is perfectly right that a particular woman living in extreme poverty can still experience high levels of happiness if she is blessed with a rather satisfied personality structure. However, for a sufficiently large group of women living in extreme poverty and deprivation, this experience will rather be the exception than the rule. Recent studies have shown that social comparison and relative incomes are strong determinants of life satisfaction and happiness (Andrew E. Clark, Paul Frijters, and Michael A. Shields 2008). Moreover, modern communication and broadcasting technologies allow almost all world citizens to compare their lives to those of the richest decile of the world population. Thus, even though a poor woman may not have directly experienced high living standards herself, she is probably aware these exist.

⁴ David Lykken and Auke Tellegen (1996) show that demographic and socioeconomic factors account for only a small part of the variance in SWB measures. They estimate the contribution of the stable component of subjective well-being, which they ascribe to genes and persistent psychological traits, to explain as much as 80 percent.

⁵ This study considers marriage between a woman and a man. We further focus on marriage only since cohabitation is still a very rare phenomenon in Korea.

⁶ The data quality KLIPS provides satisfies the highest international standards. The panel maintains 76.5 percent of the original sample throughout all waves, which is comparable to the PSID (78 percent), GSOEP (79 percent), and BHPS (77 percent). Kang (2010) shows that potential bias produced by attrition is negligible in KLIPS data.

⁷ The latter observation contrasts with studies on Germany or the UK, for example, where usually around 10 percent of the sample chooses the highest category of satisfaction (Clark et al. 2008; Clark and Georgellis 2013). It is rather unlikely that so few people are “very satisfied” in Korea, as compared to Western European countries. Instead, we believe this result has to do with cultural-specific behavior: a modest and humble use of language is often required by social norms. Especially when talking to an unknown interviewer about one's personal happiness, Koreans might be inclined to respond in a more reserved way. While this difference might affect cross-country and cross-cultural comparisons, it does not affect the present analysis, which focuses only on the Korean population and thus on a culturally and linguistically very homogeneous group.

⁸ We use a two-sample Wilcoxon rank-sum test with standardized means to test the hypothesis that the two independent samples of women and men are from populations with the same distribution. The null hypothesis of identical distributions cannot be rejected – that is, both samples do not come from different distributions.

⁹ A few observations only reported the year of the event but not the exact month. We used middle of the year to calculate the time elapsed since the event (for example, 1998 + 0.5 years). Additionally, we check for the person's marital status at the time of the event and the year preceding it.

¹⁰ This process is further described in Table A1 in the supplementary files available on the publisher's website.

¹¹ The very low levels of unemployment in general and long-term unemployment in particular found in our data restrict the analysis of the effect of long-term unemployment on life satisfaction.

¹² For further information on control variables used, see Table A2 in the supplementary files available on the publisher's website.

¹³ If the woman has been a housewife throughout marriage, she is entitled to receive 30 percent of the wealth accumulated during marriage when divorce takes place within the first ten years and 40–50 percent thereafter. Wealth formed before marriage goes to the partner who brought it into the marriage. A widow is treated with a factor of 1.5, and each child with a factor of 1. Thus the woman receives about 43 percent of total inheritance in the case of one daughter and one son.

¹⁴ The latter results of widowhood focus on the oldest generation and cannot be generalized for younger marriages. Gender inequality is usually found to be highest in the oldest generation.

¹⁵ In a measure bound between 1 and 5, one might be concerned that pre-event differences in means might affect post-event potential outcomes. However, given the compressed distribution of life satisfaction observed in our data where more than 97.5 percent of all observations fall into the range of 2 to 4, it should be valid to assume that our measure is de facto not restricted by its bounds.

¹⁶ This amount compares to the average happiness increase of being married calculated by Nattavudh Powdthavee (2008) for British women and men using BHPS data. When pooling over gender, he estimates that being married is equivalent to an increase in per capita household income by £50,500 (about US$75,000 in 1996 prices).

¹⁷ To increase happiness by 1 entire unit on the 1–5 scale, the income coefficient suggests that additional income of US$123,600 (126.6 million KRW) is needed. This increase is of a similar dimension to the estimated US$220,000 to increase happiness by 1 unit on the 1–7 scale of the BHPS data (Andre J. Oswald and Nattavudh Powdthavee 2006).

¹⁸ The gender difference in unemployment lasting two or more years is statistically significant at the 5 percent level.

¹⁹ We do control for simultaneous events as, for example, birth of a child, with variables controlling for the number of children. However, this estimates a time-averaged effect, that is, the average effect of having a child of age zero, of age one, of age two, and so on. It does not account, however, for intertemporal patterns due to anticipation and adaptation.

²⁰ Note however that when we add individual earnings to household income to the model, the lags of job entry pick up the disutility of labor; that is, they turn negative and significant and are substantially larger for men. Results are not displayed here for space reasons but can be obtained from the authors on request.

²¹ We are grateful to one of the referees for raising the point about simultaneous or near-simultaneous events.