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Australian Beauty - Borland and Leigh

Australian Beauty - Borland and Leigh

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Unpacking the beauty premium: What channels does it operatethrough, and has it changed over time?*
Jeff Borland
+
and Andrew Leigh
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Abstract
Using data from representative samples of the Australian population in the 1980s and2000s we make two main contributions to analysis of the economic effects of beauty.First, we broaden analysis of the effects of beauty beyond the labour market to examineits relation to household income. We find that beauty significantly affects totalhousehold income – primarily via respondents’ probability of employment and their hourly wage, and whether they have a partner who contributes income to the household.Second, we examine whether the returns to beauty in Australia have changed between the1980s and 2000s. Returns to beauty from the effect on a worker’s hourly wage have beenconstant across this period. We do find, however, some evidence of an increasing effectof beauty on the likelihood that a female respondent is employed; which we suggest may be due to selection effects and the growth in female workforce participation.
Keywords:
beauty premium; wages; labor force participation; occupational choice;marriage market
JEL Codes:
J12, J31, J71+ Department of Economics, University of Melbourne; Email:  jib@unimelb.edu.au  ++ Parliament of Australia; Email:andrew_leigh@ksg02.harvard.edu * Part of our analysis is based upon a new Roy Morgan survey conducted in 2009. Ethicsapproval for this survey was granted by the human research ethics committees of both theAustralian National University and the University of Melbourne. We are grateful to DanHamermesh for his advice in structuring this study, and for valuable comments on anearlier draft. Susanne Schmidt and Elena Varganova provided outstanding researchassistance. This paper incorporates work previously circulated under the title ‘Unpackingthe Beauty Premium: Is it Looks or Ego?’ which will not be published separately.
 
1. Introduction
Analysis of the effects of beauty is by now a well-established area of research ineconomics.
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Beginning with the seminal work of Hamermesh and Biddle (1994) on theCanadian and US labour markets, several studies have shown that more attractive peopleearn higher hourly wages. This appears to be true in labour markets as diverse as Britain(Harper 2000) and Shanghai (Hamermesh, Meng and Zhan 2002), and within occupationsincluding attorneys (Biddle and Hamermesh 1998), sales assistants (Sachsida et al., 2003)and NFL quarterbacks (Berri et al., 2011).Beauty effects have also been found in other domains. For example, beautiful people tendto be happier (Hamermesh and Abrevaya, 2012), more likely to be successful in solicitingcharitable donations (Landry et al. 2006), are more likely to raise revenues of their firms(Pfann et al. 2000), have a better chance of being elected into parliament (Berggren et al.,2006; Klein and Rosar 2005; King and Leigh 2009), do better on TV game shows (Belotet al, 2012), have higher earnings as prostitutes (Arunachalam and Shah 2008), and areless likely to become criminals (Mocan and Tekin, 2010).Our study extends this international literature on the effects of beauty in two importantways, using data from surveys of the Australian population undertaken in 1984 and 2009.First, we broaden the analysis of the effects of beauty beyond the labour market. We dothis by investigating the association between beauty and total household income, as wellas the individual components of household income.
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Second, we examine the stabilityof the returns to beauty across time; specifically, whether the effects of beauty change between the survey dates.Our objective in extending the analysis of the effects of beauty to household income andits components is to provide a broader perspective on where beauty matters and on thewelfare implications of attractiveness. For example, if discrimination (what Hamermeshhas referred to as ‘lookism’) causes more attractive people to earn higher wages, it might2
 
also cause them to be more likely to be employed; hence magnifying the distributionalconsequences of beauty.Establishing whether beauty has a consistent significant effect across time is an importantsource of information about the robustness of this effect. Putting together the findingsfrom previous studies – using data collected at different times – has been suggestive of stable effects of beauty; but as Hamermesh (2011, p.50) has noted: ‘Without anyadditional evidence…there is no sure way of deciding this issue’. Our study, which usesthe same survey instrument on a common population at survey dates 25 years apart, does provide the ‘additional evidence’ Hamermesh has suggested. Knowing whether therehave been changes in the size of beauty effect in recent years may also be informativeabout factors that mediate the effect of beauty on economic outcomes: such as anti-discrimination legislation or social trends towards a greater emphasis on body image and physical appearance.The effects of beauty are tested in this study by using data from two surveys – the National Social Science Survey 1984 (NSSS84), and the Roy Morgan EstablishmentSurvey from 2009 (RM09) with extra questions commissioned by us to replicate theearlier survey. As well as estimating an overall effect of beauty on household income, adisaggregated analysis of the effects of beauty on the components of household income -a respondent’s individual income from labour market activity and from other sources, andincome from their partner – is also undertaken.Similar to previous studies for other countries, we find that beauty significantly affectshourly wages of workers in Australia. We also find broader effects of beauty on totalhousehold income – and that this derives from a relation between beauty and arespondent’s probability of employment, as well as whether they have a partner whocontributes income to the household. Returns to beauty via the effect on a worker’shourly wage seem to have been constant in Australia between the 1980s and 2000s,confirming the stability of the beauty effect hypothesised by Hamermesh. We do findsome evidence of an increasing effect of beauty on the likelihood that a female3

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