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Don't Worry, Be Happy? Happiness and Reemployment

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  • Krause, Annabelle

    ()
    (IZA)

Abstract

Subjective well-being is primarily treated as an outcome variable in the economic literature. However, is happiness also a driver of behavior and life's outcomes? Rich survey data of recent entrants into unemployment in Germany show that a significant inverted U-shaped relationship exists between residual happiness and an unemployed individual's future reemployment probability and the reentry wage. Residual life satisfaction displays higher (or lower) satisfaction levels than would be predicted by a number of socioeconomic and demographic characteristics. This paper is the first to show that happiness is mainly a predictor for self-employment and less for standard reemployment. Related findings suggest that happiness matters for male unemployed, and the concept of locus of control is able to explain part of the effect. If reemployment and higher wages are considered desirable outcomes for the unemployed individual and society, the shape of the effect suggests an optimal level of happiness, which is not necessarily the highest.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7107.

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Length: 34 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7107

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Keywords: reemployment; happiness; job search; unemployment; Germany;

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Cited by:
  1. Arni, Patrick & Caliendo, Marco & Künn, Steffen & Zimmermann, Klaus F., 2014. "The IZA Evaluation Dataset Survey: A Scientific Use File," IZA Discussion Papers 7971, Institute for the Study of Labor (IZA).
  2. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.
  3. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The objective benefits of subjective well-being," LSE Research Online Documents on Economics 51669, London School of Economics and Political Science, LSE Library.

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