Frijters, Paul, John P. Haisken-DeNew, Michael A. Shields. 2004. "Investigating the Patterns and Determinants of Life Satisfaction in Germany Following Reunification." Journal of Human Resources 39(3): 649-674.

This paper investigates the patterns and determinants of life satisfaction in Germany following reunification. We implement a new fixed-effect estimator for ordinal life satisfaction in the German Socio-Economic Panel and find negative effects on life satisfaction from being recently fired, losing a spouse through either death or separation, and time spent in hospital, while we find strong positive effects from income and marriage. Using a new causal decomposition technique, we find that East Germans experienced a continued improvement in life satisfaction to which increased household incomes contributed around 12 percent. Most of the improvement is explained by better average circumstances, such as greater political freedom. For West Germans, we find little change in average life satisfaction over this period.

Michael A. Shields is a senior lecturer in economics at the University of Melbourne, Parkville, Melbourne, Australia. Paul Frijters is at the Research School for the Social Sciences, Australian National University, Canberra, Australia. John Haisken-DeNew is at the RWI, Essen, Germany. The authors would like to thank two anonymous referees for their useful comments. They are also grateful to Christopher M. Schmidt, Michael R. Veall, Gert G. Wagner, Klaus F. Zimmermann, Jeff Borland, Lisa Cameron, Lisa Farrell, Paul Gregg, Stephen Wheatley Price, Mark Wooden, and participants at the Australasian Meeting of the Econometric Society (Brisbane 2002), the European Society for Population Economics Annual Conference (Bilbao 2002), the German Socio-Economic Panel Users Meeting (Berlin 2002), and seminar participants at the University of Melbourne and the Australian National University. The data contained in this article may be obtained from the authors between January 2005 and December 2008.