Self-Assessment Of Households Economic Welfare As A Manifestation Of Adjustment To Transition And European Integration Processes In The Case Of Estonia

Abstract

This paper analyzes Estonian households' perception of welfare, including the determinants and dynamics of said perception under transition. Data from the Estonian Household Income and Expenditures Survey 2000 and 2001 are used to construct samples. Ordered probit and linear regression models are employed to investigate the determinants of the self-assessed economic situations and income levels as determined to be necessary by households for conducting normal life. The income level perceived by households as necessary to conduct normal life is found to vary substantially depending on a given households actual income and other extant household characteristics. This indicates that factors other than income per capita alone are relevant for understanding households welfare and their perception of normal life, and, hence, should be among the targets of social policy and factored into the development strategies of Estonias social protection system.