Why Are the Unemployed So Unhappy?Evidence from Panel Data

1998/02/01 by Liliana Winkelmann, Rainer Winkelmann · 35 citations
Health Professions · Psychology · Economics, Econometrics and Finance · #Employment and Welfare Studies #Psychological Well-being and Life Satisfaction #Labor market dynamics and wage inequality

paper · doi:10.1111/1468-0335.00111

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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