Why Are the Unemployed So Unhappy?Evidence from Panel Data

1998/02/01 by Liliana Winkelmann, Rainer Winkelmann · 1,669 citations
Economics, Econometrics and Finance · Health Professions · Psychology · #Demographic economics #Demography #Econometrics #Economic growth #Economics #Employment and Welfare Studies #Happiness #Labor market dynamics and wage inequality #Labour economics #Life satisfaction #Longitudinal data #Panel data #Psychological Well-being and Life Satisfaction #Psychology #Set (abstract data type) #Social psychology #Sociology #Subjective well-being #Unemployment

paper · doi:10.1111/1468-0335.00111

published in Economica 65(257), 1-15 (Wiley)

openalex publication_date 1998/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/21

Abstract

This paper tests for the importance of non‐pecuniary costs of unemployment using a longitudinal data‐set on life‐satisfaction of working‐age men in Germany. We show that unemployment has a large detrimental effect on satisfaction after individual specific fixed effects are controlled for. The non‐pecuniary effect is much larger than the effect that stems from the associated loss of income.

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