A Pecuniary Explanation for the Heterogeneous Effects of Unemployment on Happiness
- PDF / 922,807 Bytes
- 26 Pages / 439.37 x 666.142 pts Page_size
- 1 Downloads / 158 Views
A Pecuniary Explanation for the Heterogeneous Effects of Unemployment on Happiness Jianbo Luo1
© Springer Nature B.V. 2019
Abstract Why unemployment has heterogeneous effects on subjective well-being remains a hot topic. Using German Socio-Economic Panel data, this paper finds significant heterogeneity using different material deprivation measures. Unemployed individuals who do not suffer from material deprivation may not experience a life satisfaction decrease and may even experience a life satisfaction increase. Policy implications for taxation and unemployment insurance are discussed. Keywords Unemployment · Subjective well-being · Heterogeneity · Material deprivation · Minimum required income JEL Classification D6 · I3 · J6
1 Introduction Why unemployment has heterogeneous effects on subjective well-being (SWB1) remains a hot topic. The previous literature uses non-pecuniary factors to explain the negative effects of unemployment after income is controlled for. Various non-pecuniary factors are proposed to explain this phenomenon, such as the social work norm, psychological distress, and so on (see Winkelmann 2014 for a review). Two exceptions are Bayer and Juessen (2015) and Luo (2017), who suggest that the root cause is actually pecuniary. The heterogeneous effects of unemployment on SWB present a further controversy. Winkelmann (2009) and Gielen and Van Ours (2014) find that about half of the unemployed do not experience SWB losses; they may even feel that their SWB has increased. Ideally, unemployment could be identified as a neutral or positive event for some subgroups. The literature finds that the negative effects of unemployment differ depending on gender, age, education, wealth, local employment conditions, previous employment status, and SWB itself (Green 2011; Gathergood 2013; Chadi 2014; Binder and Coad 1
In this paper SWB, happiness, and life satisfaction are used interchangeably.
* Jianbo Luo [email protected] 1
Department of Economics, State University of New York at Buffalo, Buffalo, NY, USA
13
Vol.:(0123456789)
J. Luo
2015a, b; Hetschko 2016). However, few papers could identify a subgroup of unemployed individuals who suffer no SWB decrease or even experience a SWB increase. Using German Socio-Economic Panel (GSOEP) data, this paper finds significant heterogeneity using different material deprivation measures. Unemployed individuals who do not suffer from material deprivation may not experience a life satisfaction decrease and may even experience a life satisfaction increase. Thus, this paper makes a unique contribution by identifying subgroups who experience neutral or positive life satisfaction changes after unemployment. This paper highlights a unique feature of the unemployed, i.e., their household income is insufficient to support their living (as measured by the minimum required income for their living standard). Then, various objective measures (e.g., income) and subjective measures (e.g., economic concerns and financial satisfactions) of material deprivation are en
Data Loading...
