A neighbor like me: the effect of fractionalization on subjective well-being

ABSTRACT

Population shifts resulting from increasing cross-national migration have caused the diversity and its economic effects to become a hotly contested issue in modern societies. Using fractionalization as a proxy for diversity, we ask: what is the effect of fractionalization on subjective well-being (SWB)? Using the fractionalization index created by Alesina et al., we hypothesize that (1) the effect of ethnic, linguistic, and religious fractionalization on SWB is conditional on the size of the welfare state and that (2) decommodifying welfare states will mediate the (potential) negative impact of ethnic heterogeneity, resulting in higher levels of SWB. Ultimately, we find evidence for both of our claims, and conclude by emphasizing the importance of decommodification for both economic growth and SWB.

KEYWORDS:

• Ethnicity
• happiness
• welfare
• diversity
• intergroup conflict
• multiculturalism
• immigration

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 “Decommodification is conceived as any political, social, or cultural process that reduces the scope and influence of the market in everyday life.” (Vail 2010, 310)

2 “The welfare state dispenses unemployment and sickness benefits, family allowances, pensions, and other kinds of income maintenance to those in need.” (Radcliff 2013, 110)

3 Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, South Korea, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States.

4 The same countries, albeit excluding France, Germany, Greece, the Netherlands, and Taiwan.

5 We further exclude Belgium, Denmark, Finland, Italy, Norway, Spain, and Sweden but include the Netherlands once more.