Country invariance of compensating differentials as a share of income is also supported by research showing that elasticities are relatively similar across countries with a similar level of economic development (Helliwell et al., A fixed-effects framework also reduces the risk of biased estimates dueunobserved heterogeneity (i.e. omitted time-invariant effects that are correlated to the regressors). Introducing fixed-effects is indeed equivalent to regressing the change in life satisfaction on the change in explanatory variables. In the sample of countries under study, there appears to be very low correlation (i.e. below 0.25) between changes in log income, longevity and unemployment, and hence no risk of encountering multicollinearity problems.