Jianbo Luo

University at Buffalo, The State University of New York | SUNY Buffalo · Department of Economics

Many mainstream schools of economics argue that work is a burden, while nonmainstream schools argue that this might not be entirely true. This paper aims to reconcile this difference by suggesting that individuals will balance income and leisure only after the fixed expense for their current living standard is met. Three applications show that the...

This paper analyzes how people’s subjective well-being adapts to income poverty in Switzerland and Germany and presents two empirical findings. First, financial satisfaction (FS) does not adapt in either country. However, life satisfaction fully adapts in Switzerland but not in Germany. Second, people in income poverty have income lower than their...

This paper finds that unanticipated wage elasticity of New York cab drivers is negative when controlling for measurement error and division bias. Moreover, after providing theoretical and empirical evidence showing that Farber's (2015 Quarterly Journal of Economics) instrumental variable (IV) approach is inconsistent, I propose a new IV that yields...

This paper is the first to use national representative panel data to demonstrate that individuals do not adapt to high income in the long run: after five or more years, the life satisfaction of high-income people is still higher than that of the average population. Using entropy balancing (EB) matching and Lasso variable selection to reweight the c...

Why unemployment has heterogeneous effects on subjective well-being remains a hot topic. Using German Socio-Economic Panel data, this paper finds significant heterogeneity using different material deprivation measures. Unemployed individuals who do not suffer from material deprivation may not experience a life satisfaction decrease and may even exp...

Many mainstream schools of economics argue that work is a burden, while nonmainstream schools argue that this might not be entirely true. This paper aims to reconcile the differences by suggesting that individuals will balance income and leisure only after the necessary expense for their current living standard is met. Thus, whether work is a burde...

The Easterlin paradox demonstrates that SWB is positively correlated with income at a given point in time but adapts to income in the long run. This paper explains the paradox using the living standard and shows that this explanation avoids the caveats of other popular explanations such as comparison income and previous income. This paper also demo...

The happiness literature shows that people’s subjective well-being adapts to various life events, but there is no adaptation to poverty. This study finds that the minimum required income for the living standard remains stable during poverty duration and is higher than the household income. Individuals in poverty are not able to adjust their living...

This paper explains why people’s subjective well-being (SWB) fails to adapt to unemployment, even though people adapt to various life events. Although the unemployed downgrade their living standard when they enter into unemployment, in the long run, they fail to increase their income or further downgrade their living standard. Thus, neither financi...

The happiness literature finds that unemployment substantially decreases subjective well-being even after controlling for income. Existing research uses non-pecuniary costs to explain such results. This paper, however, demonstrates that the root cause is pecuniary. The detrimental effects of unemployment decrease considerably after including an add...

Why unemployment has heterogeneous effects on subjective well-being remains a hot topic. Using German Socio-Economic Panel (GSOEP) data, this paper finds significant heterogeneity using different material deprivation measures. Unemployed individuals who do not suffer from material deprivation may not experience a life satisfaction decrease and may...

This applied theoretical paper finds that in-work benefits recipients tend to increase labor income, regardless of the benefits’ structure. A theory, the fixed cost of living, is used to explain this finding. Several applications of this theory are given. First, a critical review shows why the empirical papers are inconsistent. Second, using wage i...

Research about labor supply with flexible hours generates some conflicted findings and raises debate — which model is better, intertemporal neoclassical or reference-dependent preferences? This paper provides the third solution — static neoclassical. Specifically, a simple model with Cobb-Douglas preferences, incorporating fixed cost and narrow bra...