Goodbye Lenin, Hello Europe? An Empirical Investigation of Subjective Well-being in Transition and Post-transition Economies

Abstract

In this dissertation, I rely on self-reported objective and subjective data to study processes related to acquiring new opportunities and exercising choice in transition and post-transition countries, i.e., the economies in Central and Eastern Europe and the Former Soviet Union, which recently underwent or are still going through transitions to democracy and market economy. The departure point is the proposition that at the macro level, transition consists of marketization and democratization processes but at the individual level, transition generated a process of acquiring autonomy, i.e., taking charge of one's own life and making personal choices instead of relying on the government. Frustration and disillusionment may accompany this process, as it is often a difficult transformation involving uncertainty and volatility, sacrifices, and changing time use, norms, or reference groups.

This dissertation consists of three separate but related essays. Specifically, Chapter 1 taps into the relationship between capabilities and subjective well-being. Chapter 2 directly builds on that by exploring the well-being consequences of the pursuit of new opportunities through migration. Finally, Chapter 3 investigates the life satisfaction effects of joining the European Union, which was a process that provided citizens in transition economies with new rights and opportunities. The research questions in these three essays relate to broader inquires about the well-being implications of the process of learning to be in charge of one's own life.

A fundamental, yet not well-understood determinant of human well-being is the capacity to exercise choice and live a fulfilling life. Chapter 1 explores how actual and perceived manifestations of this capacity relate to subjective well-being dimensions. The chapter furnishes evidence that in transition economies and other world regions, capabilities and subjective well-being are related and both objective and subjective capabilities are more important for life evaluations than for emotional states. Capabilities are also generally less important for the happiest respondents. We further demonstrate that the same set of capabilities and means has a slightly different relative importance for different well-being dimensions across different regions. We also show novel evidence related to the least well-understood subjective well-being dimension: eudaimonic happiness, which relates to having meaning and purpose in life. Finally, our results demonstrate that while employment arrangements contribute to happiness overall, they are also associated with stress and anger.

The second chapter uses Gallup World Poll data, statistical matching, and difference-in-differences to assess the effects of migration on the well-being of migrants from transition economies living in advanced countries. In addition to increasing household income, migration enhances subjective well-being. While all migrants realize income gains, there is a substantial well-being migration premium for the unhappiest movers. Moreover, by voting with their feet, migrants not only exercise choice but also enhance their perceived opportunities, including satisfaction with freedom and standard of living. Based on the results, migration can be seen as a development mechanism as it enhances migrants' means, well-being, and capabilities.

The third chapter provides novel evidence about the perceived well-being effects of EU accession in the ten post-communist countries which joined the European Union between 2004 and 2007 (EU-10). Using difference-in-differences, the main finding is that EU accession had no immediate influence on the perceived well-being of Bulgarians and Romanians (EU-2) in 2007 but was positively related to life satisfaction in 2008-2009, with some variation by socio-demographic groups. In addition, there were EU-related well-being gains in most of the EU-8 countries, which were experienced shortly after joining. Taken at face value, the results suggest that EU membership has immediate perceived well-being effects in the more advanced transition members and is associated with well-being gains only after a lag in the less advanced ex-communist members. From a policy perspective, these results are relevant to countries aspiring to EU membership such as the Western Balkans and the Ukraine. The chapter also suggests that the increased control of corruption and EU aid were associated with higher life satisfaction in Bulgaria and Romania, although a greater share of EU imports had the opposite influence. In the EU-8, better governance, economic growth, and EU imports had a positive influence on life satisfaction, while the control of corruption had a marginally significant negative association.

This dissertation's results have several policy implications. First, given that public policy has a role in assisting those lacking choice and freedoms by providing them with equal opportunities, the results in Chapter 1 may ultimately have importance in that arena. The findings suggest that the same set of opportunities and means may have a different meaning and value in different contexts or among different cohorts. Therefore, policies aiming to enhance opportunities may have a differential impact on subjective well-being across groups. For example, if policymakers aim to enhance subjective well-being, they may choose to invest in objective capabilities and means (such as income, employment, and education). Alternatively, for normative reasons, decision-makers may choose to equalize capabilities of all kinds for all citizens despite the differential weights that different put on them and the differential impact on subjective well-being.

Second, immigrant well-being is not only a pivotal part of each nation's well-being but immigrant dissatisfaction may also be symptomatic of deeper social problems such as social exclusion and discrimination. While policy debates and the extant literature tend to focus on the distributional consequences of immigrants on natives in the destination countries, Chapter 2 finds that migration has positive effects on the incomes, subjective well-being, and perceived opportunities of migrants from transition economies living in advanced countries, implying that migration can be a development mechanism enhancing individual well-being. Yet, arguably migration is not a comprehensive development strategy as it does not solve deeply-rooted social problems such as corruption, poor economic policies, and market and government failures in the sending countries.

Third, Chapter 3's findings are relevant to policymakers in the Western Balkans and the Eastern Partnership countries, which aspire to EU membership. Like Bulgaria and Romania, these candidate countries are less advanced and less prepared for membership than accession countries in previous enlargements. Therefore, if accepted into the EU, citizens in these countries will likely experience the subjective well-being gains after a lag. The results also have implications for the EU's enlargement and integration policies.