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The effects of age and job protection on the welfare costs of inflation and unemployment

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Author Info

  • Becchetti, Leonardo
  • Castriota, Stefano
  • Giuntella, Giovanni Osea

Abstract

We extend the happiness literature on the welfare costs of inflation and unemployment by looking at age and job market characteristics. Our findings show that the relative welfare cost of unemployment versus inflation is higher than one, and much higher in intermediate age cohorts and in low job protection countries. The potential role of our findings in explaining the heterogeneous behaviour of CBs under different job market settings is discussed and compared with alternative explanations based on other institutional or structural differences in economies and in their reactions to shocks.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 26 (2010)
Issue (Month): 1 (March)
Pages: 137-146

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Handle: RePEc:eee:poleco:v:26:y:2010:i:1:p:137-146

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Phillips curve Unemployment/inflation trade-off Happiness Employment protection Aging population;

References

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  2. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-41, May.
  3. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 809-827, November.
  4. Rafael Di Tella & Robert MacCulloch, 2007. "Happiness, Contentment and Other Emotions for Central Banks," NBER Working Papers 13622, National Bureau of Economic Research, Inc.
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  16. Jean-Guillaume Sahuc & Frank Smets, 2007. "Differences in interest rate policy at the ECB and the Fed : an investigation with a medium-scale DSGE model," Documents de recherche 07-07, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  17. Bruno S. Frey, 2008. "Happiness: A Revolution in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062771, December.
  18. Robert J. Barro & David B. Gordon, 1984. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Simon Luechinger & Stephan Meier & Alois Stutzer, 2008. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap between the Public and Private Sectors," SOEPpapers on Multidisciplinary Panel Data Research 106, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Simon Luechinger & Stephan Meier & Alois Stutzer, 2008. "Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and the Private Sector," Working papers 2008/02, Faculty of Business and Economics - University of Basel.
  3. Stracca, Livio, 2013. "Financial imbalances and household welfare: empirical evidence from the EU," Working Paper Series 1543, European Central Bank.
  4. Leonardo Becchetti & Alessandra Pelloni, 2010. "What are we learning from the life satisfaction literature?," Econometica Working Papers wp20, Econometica.
  5. Claudia Biancotti & Giovanni D'Alessio, 2007. "Inequality and Happiness," Working Papers 75, ECINEQ, Society for the Study of Economic Inequality.
  6. Claudia Biancotti & Giovanni D'Alessio, 2008. "Values, inequality and happiness," Temi di discussione (Economic working papers) 669, Bank of Italy, Economic Research and International Relations Area.
  7. Rafael Di Tella & Robert MacCulloch, 2007. "Happiness, Contentment and Other Emotions for Central Banks," NBER Working Papers 13622, National Bureau of Economic Research, Inc.

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