The construction of an individual measure of relative labor deprivation also allows for the use of this measure in distributional analyses by constructing Pen’s parades, Cumulative Distribution Functions (CDFs) or Lorenz curves. As an example, in Figure 1 (left hand panel) we plotted the Lorenz curves using the two different assumptions of joint and separate reference groups. The results illustrate graphically what we have learned so far. If the reference group is gender specific, as opposed to being relative to everyone in society, the feelings of deprivation would be lower and the societal RLD is less prominent. Indeed, if we estimate RLD within each gender, we find that RLD for men is much more pronounced than RLD for women, as we noted when we looked at the indexes (right hand panel, Figure 1).

# **5.3 How good is the indicator of relative labor deprivation?**

The concept of relative labor deprivation developed in this paper is an artificial construct that claims the ability to capture subjective feelings of deprivation. In this section, we attempt to determine whether the measure of relative deprivation proposed is effectively related to subjective feelings of satisfaction or deprivation as reported by respondents in the MHYS. For a sub-sample of the population (2,128 young individuals aged 15 to 29 who are currently out of school) we can examine the relation between relative labor deprivation and subjective wellbeing. The survey we use includes questions on selfreported satisfaction with different aspects of life. It also includes a question on the intention to migrate, a variable we presume to signal discontent with the current situation, especially with labor market status. We should expect a good measure of deprivation to be inversely related with measures of subjective satisfaction as found for example in D’Ambrosio and Frick (2004) and in Silber and Verme (2010, 2011).

Table 8 shows the results of an ordered probit regression of young people (aged 15-29) where the dependent variable is satisfaction with opportunities to improve social status in the future. The satisfaction variable takes four values, ranging from very unsatisfied=1 to very satisfied=4. We consider different models. Model 1 does not include the indicator of relative labor deprivation, rather it includes the actual employment status of individuals. Conversely, models 2-4 include our relative labor deprivation variable but exclude employment. Model 2 estimates the influence of relative deprivation on satisfaction levels when the reference group is assumed to be the entire population. Models 3 and 4 include the measure of relative labor deprivation when the reference group is segmented along gender lines as we did in the previous section.

As expected, employment status matters for satisfaction with opportunities to improve social status in the future. Employed people evidently see better prospects for the future as compared with the nonemployed. More importantly from the standpoint of this paper, in all specifications (models 2, 3, and 4) satisfaction with opportunities to improve social status in the future is negatively and significantly associated with relative labor deprivation. This relation is significant at the 1 percent level in all specifications and becomes stronger when the reference group is split along gender lines, a fact that supports our hypothesis that males and females tend to select the reference group within their own gender.

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