Relationships Among Social Policy Factors, National Competitiveness, and Happiness

Abstract

The aim of this study is to construct a causal relationship model explaining the relationships between social policy factors and national competitiveness and national happiness; and to analyse how the former affect the latter as final dependent variables. In doing this, the study employs data for OECD member countries. Research regarding the determinants affecting national competitiveness and people’s happiness has tended to focus mainly on personal or collective characteristics such as age, gender, economic infrastructure, etc. As a result, social policy factors, including welfare budget, unemployment support budget and income inequality, have rarely been addressed in the analysis of determinants affecting national competitiveness or happiness, which is regarded as the final policy aim to be achieved by government. In particular, there has been little academic research utilizing OECD database statistics on social policy indicators. Against this background, this study uses the Structural Equation Modeling approach (SEM) to identify the direct and indirect effects of social policy factors on national competitiveness and happiness, and puts forward policy suggestions for attaining these two great goals of social policy.