About the Project

There are numerous approaches on how to measure individual welfare (or well-being). One can generally distinguish between unidimensional approaches, which take into account only a single dimension of human lives, and multidimensional approaches, which recognize that individual welfare consists of multiple dimensions. The most prominent and used among the unidimensional approaches is the one that takes income as the measure of individual well-being, but there are approaches that focus on some other single dimension such as health. Although one can o_er good reasons, both theoretical and practical, for focusing on one dimension only, it is still diffcult to argue against multidimensional nature of welfare.

One multidimensional approach known in the literature is the so-called equivalence approach which in fact is a class of approaches where the most prominent among them being the so-called equivalent income approach. An individual's equivalent income is defined as the amount of income that, in combination with some reference levels of non-income dimensions (i.e., health, security, housing quality, etc.), gives the individual the same level of welfare as her actual income combined with the actual levels of non-income dimensions. Conceptually, the equivalent income approach allows one to take into account heterogeneity of preferences over different dimensions (i.e., what relative importance is given to each dimension) for different individuals depending on the researcher's judgement on the nature and extent of preference heterogeneity and depending on data availability.

Although some ideas similar to those on which the equivalent income approach is essentially based date several decades back, the approach is still underused in welfare measurement. The applications in this project are focused on selected European countries and on two contexts of welfare measurement. The first context is the measurement of the overall welfare (\quality of life"), and the second one is the measurement of welfare on the job (\job quality" or \work quality"). Using the equivalent income approach in the context of welfare on the job is conceptually the same as in the context of overall welfare, but the dimensions considered are different: while the overall welfare depends, as has already been mentioned, on income and non-income dimensions such as health, security, or housing quality, dimensions relevant for welfare on the job are wages and non-wage dimensions such as working conditions or the alignment of work tasks with other spheres of one's life. In both applications, the equivalent incomes (i.e., equivalent wages in the job quality application)  will be estimated for samples of individuals in a number of selected European countries and years.

The aim of the project is answering the following main questions:

• Whether the rankings of countries based on their average equivalent incomes/wages differ from the rankings based on their average incomes/wages, and if so, why?
• Which non-income/wage dimensions are most important?
• Whether the growth rates of countries average equivalent incomes/wages differ from the growth rates of their average incomes/wages?
• What are the relative contributions of income/wage growth and changes in non-income/wage dimensions to growth of equivalent incomes/wages?
• How does income/wage inequality compare to inequality in equivalent incomes/wages and what are the contributions of different dimensions to the difference?

Expected results/outputs: The main expected result of the project is the production of scientific research on the subject of measuring multidimensional welfare in the overall life and welfare at work in European countries, with the objective of publishing two research articles in internationally competitive scientific journals. Inter-results of the project include presentations of (parts of) the research at seminars and conferences, published professional articles, the publication of the results in the EIZ Working Papers, and increase of the scientific research competencies of Ivica Rubil and Marko Ledić, as a target group, and their inclusion in the European Research Area.

Activities: Project activities, among other things, include the management and coordination of the implementation of project activities; financial management and reporting; short-term mobility - attending shorter forms of education in the form of summer schools; mobility – six-month research stay at a foreign institution; the sole implementation of scientific research (data gathering, collection and interpretation of relevant literature, descriptive statistics of the gathered data, data analysis by standard micro-econometric techniques, connecting parts of the study into one unit) and the dissemination of project results through participation in international science conferences, public presentations, and through scientific publications.

Methodology: In this research project the data from the European Quality of Life Survey and the European Working Conditions Survey for 2007 and 2011 will be used. The data on total incomes, wages and other nonmonetary dimensions of welfare will be analyzed using micro-econometric techniques for cross-sectional data. The Shapley decomposition method will be used to estimate the contributions of income/wages and nonmonetary dimensions to the total welfare.

_______________________

Program: Research grants within the so-called “Research scholarships for professional development of young researchers and postdocs” are part of the Operational Programme “Human Resources Development 2007-2013” by the European Social Fund and conducted by the Croatian Ministry of Science, Education and Sports and Agency for Vocational Education and Training and Adult Education

Source EIZ