Tag Archives: well-Being

Inequality and inclusive growth : Are education and innovation favoring firm performance and well-being?

FEMISE is pleased to announce the publication of its research project FEM42-10, “ Inequality and inclusive growth in the South Mediterranean region: Are education and innovation activities favoring firm performance and citizens’ wellbeing?”.

The research project was coordinated by Inmaculada Martinez-Zarzoso (University Jaume I and University of Goettingen) and includes the following 3 papers:

Returns to Vocational and University Education in Egypt

While tertiary skills are important for growth in developed countries, it is primary and secondary education that are related to development in developing countries. Despite the substantial expansion in technical and vocational education in Egypt, the labor market lacks technical skilled workers not only in numbers but also in competences. This paper examines the impact of education on labor market outcomes in Egypt, with a focus on returns to vocational secondary and technical higher education in 1998, 2006 and 2012. We provide estimates of incremental rates of return to education based on selectivity corrected earnings equations and quantile regressions that give credence to the view that technical education has generally been inequality reducing in Egypt. The main policy implication of this paper’s analysis is that quality and labor market relevance of vocational education remains the key to an effective reform. Encouraging private businesses to invest in vocational education will be of little use if the trainees are still faced with social stigma that relegates them to low-paid jobs. Therefore, a policy recommendation is to design governmental measures to improve the ‘image’ of vocational education in Egypt.

Gender Gap and Firm Performance in Developing Countries

This paper uses firm-level data from the World Bank Enterprise Survey (WBES) to investigate productivity gaps between female and male-managed companies in developing countries and to compare the outcomes obtained for different regions in the world. We depart from the previous literature by using the gender of the top manager as target variable, which is newly available in the 2016 version of the WBES. The main results indicate that it is crucial to distinguish between female management and female ownership and also the confluence between both. We find that when the firms are managed by females and there are not female owners, they show a higher average labour productivity and TFP. However, if females are among the owners and a female is the top manager, then their productivity is lower than for other firms. These results are very heterogeneous among regions. In particular, results in South Saharan Africa, East Asia and South Asia seems to be driving the general results, whereas in Latin America and Eastern Europe and Central Asia, female participation in ownership seems to be negatively related to firm performance.

Real convergence between ENP and southern European countries: a cluster analysis

This paper analyses the convergence pattern of GDP per capita, productivity, inequality and unemployment in both ENP and southern European (SE) countries. It follows the methodology proposed by Phillips and Sul (2007, 2009) in which different convergence paths can be distinguished among heterogeneous economies involved in a convergence process. This heterogeneity is modelled through a nonlinear time varying factor model, which provides flexibility in studying idiosyncratic behaviours over time and across section. The main results from the convergence analysis show that whereas there is convergence in unemployment, GDP per capita and productivity between EU and ENP countries, no convergence is found for inequality. Among the challenges of an evolving neighbourhood, inclusive economic development should be included in the new ENP approach.

A Cross-Country Assessment of Well-Being and Quality of Life in the Euromed Region: Models and Measurements

The broad objective of this research is to deliver insights into the process through which income and consumption explain Subjective Well-Being (SWB). Extant studies on how individual economic conditions influence SWB mainly focus on the role of income as a driver of SWB. These studies show income to be a modest correlate of SWB. In the present research we see income as a means that enables consumption. The view is that consumption enables people to satisfy their needs, which in turn explain SWB. Hence, while some studies suggest that policy makers may act on people’s income to influence SWB, the present study shifts the focus to consumption and need satisfaction as antecedents of SWB, which has important theoretical and practical implications.

In line with consumption theories, we study consumption in terms of individually perceived consumption deprivation. We distinguish three types of consumption deprivation: functional (deprivation of food, water, shelter, etc.), leisure (deprivation of goods and services that provide pleasurable experiences) and status (deprivation of goods linked to self-enhancement). Drawing on Maslow’s need hierarchy theory and Deci and Ryan’s psychological needs theory, we distinguish different types of needs. In particular, we differentiate lower-order needs related to biological sustenance and safety (basic needs) from higher-order needs related to social belongingness (social needs), self-esteem (esteem needs), and self-actualization (actualization needs). Hence, we predict that SWB is driven by consumption, but only to the extent that consumption leads to needs fulfillment (Figure 1).

Figure 1: Conceptual Model Fig inFEm3414-sumary

The model test relies on data collected in 2012 from representative samples in four countries: Tunisia, Morocco, France, and Benin. The country comparison of consumption deprivation reveals that people in France feel the least deprived (in all three categories of goods), followed by Tunisia, Morocco, and Benin. The measures show good psychometric properties and appropriate levels of cross-cultural measurement invariance, thus enabling cross-cultural comparisons.

Our empirical analyses demonstrate that consumption is an important determinant of SWB, but only through the mediating effect of needs satisfaction. In particular, the empirical results show that the direct effect of consumption on SWB disappears when needs satisfaction is introduced into the model, suggesting that the relationship between consumption and SWB is fully mediated by needs satisfaction. This result consistently holds on the aggregate level (four countries), at the level of each individual country (France, Tunisia, Morocco, Benin), as well as for different income groups. Consequently, policy makers who are concerned with SWB should focus on need satisfaction and act upon its antecedents, one of which is consumption.

Our results show that SWB is essentially determined by the satisfaction of basic needs (food, shelter, and safety) and esteem needs (respect, status, and autonomy). Satisfaction of actualization needs contributes to SWB to a much lesser extent. Surprisingly, satisfaction of social needs does not contribute to SWB at all. Hence, the key drivers of SWB on which policy makers should focus are satisfaction of basic and esteem needs.

The different consumption types act differently on needs satisfaction. While some differences emerge between the four countries and income groups, it appears that consumption deprivation of basic goods determines essentially basic need satisfaction; consumption deprivation of leisure goods determines basic and particularly esteem need satisfaction; consumption deprivation of status goods is essentially related to esteem need satisfaction.

Governments are concerned with promoting the welfare of their people and how to best plan and adjust policy to take care of what citizens need and want. Therefore, policy makers require a solid empirical information base for action. Policy makers have various means to stimulate consumption, such as income tax policies, subsidized programs, trade regulations or communication policies. Community governments can assess the extent to which their services are effective in serving the needs of community residents. These include services for fire fighting, ambulances, libraries, as well as community-related services such as alcohol/drug abuse services, crisis intervention services, family planning services, and many others that may effectively contribute to enhance different types of need satisfaction (Sirgy et al., 1995). The measures and models developed in this research may be used as a diagnostic tool to periodically assess the effectiveness of such services. Need satisfaction fulfillment can also be used to conduct program evaluations at regional as well as at national levels. The need fulfillment approach is useful in guiding the formulation of public policy such that industry and public policy officials in various institutional sectors (nursing, healthcare, transportation, etc.) may draw on the needs fulfillment approach to formulate policies and concrete action plans. They may as well encourage the business sector to develop appropriate goods and services that meet specific needs in an attempt to enhance SWB and quality of life.