You’re Fired! The Causal Negative Effect of Unemployment on Life Satisfaction
AbstractThis paper examines the impact of unemployment on life satisfaction for Germany 1984–2006, using a sample of men and women from the German Socio- Economic Panel (SOEP). Across the board we find large significant negative effects for unemployment on life satisfaction.This paper expands on previous cornerstone research from Winkelmann and Winkelmann (1998) and explicitly identifies truly exogenous unemployment entries starting from 1991.We find that for women in East andWest Germany, company closures in the year of entry into unemployment produce strongly negative effects on life satisfaction over and above an overall effect of unemployment, providing prima facie evidence of a reduced outside work option, large investments in firm-specific human capital or a family constraint. The compensating variation in terms of income is dramatic, indicating enormous non-pecuniary negative effects of exogenous unemployment due to company closures.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0063.
Length: 31 pages
Date of creation: Aug 2008
Date of revision:
Find related papers by JEL classification:
- Z1 - Other Special Topics - - Cultural Economics
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-04 (All new papers)
- NEP-HAP-2008-11-04 (Economics of Happiness)
- NEP-LAB-2008-11-04 (Labour Economics)
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