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New measures of the costs of unemployment: Evidence from the subjective well-being of 3.3 million Americans

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  • John F. Helliwell
  • Haifang Huang

Abstract

Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16829.

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Date of creation: Feb 2011
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Publication status: Forthcoming, Economic Inquiry.
Handle: RePEc:nbr:nberwo:16829

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References

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  1. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  2. Andreas Knabe & Steffen Rätzel, 2007. "Quantifying the psychological costs of unemployment: the role of permanent income," FEMM Working Papers 07012, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  3. Wolfers, Justin, 2003. "Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Well-Being," International Finance, Wiley Blackwell, Wiley Blackwell, vol. 6(1), pages 1-26, Spring.
  4. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, American Economic Association, vol. 91(1), pages 335-341, March.
  5. Mavridis, Dimitris, 2010. "Can subjective well-being predict unemployment length ?," Policy Research Working Paper Series, The World Bank 5293, The World Bank.
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Cited by:
  1. John F. Helliwell, 2012. "Understanding and Improving the Social Context of Well-Being," NBER Working Papers 18486, National Bureau of Economic Research, Inc.
  2. Abel Brodeur & Sarah Flèche, 2013. "Where the Streets Have a Name: Income Comparisons in the US," PSE Working Papers, HAL halshs-00795198, HAL.
  3. Lars Osberg, 2011. "Why Did Unemployment Disappear from Official Macro-Economic Policy Discourse in Canada?," New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, Centre for the Study of Living Standards, in: Fred Gorbet & Andrew Sharpe (ed.), New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, pages 127-162 Centre for the Study of Living Standards.
  4. Timothy J. Bartik, 2013. "Social Costs of Jobs Lost Due to Environmental Regulations," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 13-193, W.E. Upjohn Institute for Employment Research.
  5. repec:hal:wpaper:halshs-00795198 is not listed on IDEAS
  6. John F. Helliwell, 2011. "How Can Subjective Well-being Be Improved?," New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, Centre for the Study of Living Standards, in: Fred Gorbet & Andrew Sharpe (ed.), New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, pages 283-304 Centre for the Study of Living Standards.
  7. Tyler Atkinson & David Luttrell & Harvey Rosenblum, 2013. "How bad was it? The costs and consequences of the 2007–09 financial crisis," Staff Papers, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Jul.
  8. Michael Landesmann & Isilda Mara, 2013. "Do I Stay because I am Happy or am I Happy because I Stay? Life Satisfaction in Migration, and the Decision to Stay Permanently, Return and Out-migrate," wiiw Working Papers, The Vienna Institute for International Economic Studies, wiiw 103, The Vienna Institute for International Economic Studies, wiiw.

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