NATIONAL-LEVEL SUBJECTIVE WELLBEING, INSTITUTIONAL QUALITY AND MANUFACTURING PRODUCTIVITY: A CROSS-COUNTRY PANEL QUANTILE ANALYSIS

Literature suggests that both institutional quality and subjective wellbeing drive productivity and economic growth in the country. However, recent evidence has shown wellbeing outcomes to be highly correlated with institutional quality, which poses a pertinent question of whether national wellbeing merely captures the effects of institutions in predicting productivity growth. By using a global dataset of 3,671 manufacturing firms from 34 countries from 2012 to 2019, I apply quantile regressions to assess the effects of national-level subjective wellbeing on firm-level productivity across various institutional contexts. The results show significant effects of subjective wellbeing at different quantiles of the firms’ productivity distribution. I find large effects of subjective wellbeing across various country samples, including those with low institutional quality (governance, property rights, infrastructure, innovation, competitiveness, and HDI). Policy implications are brought out in the light of these results.