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Why Are the Unemployed So Unhappy? Evidence from Panel Data


  • Winkelmann, Liliana
  • Winkelmann, Rainer


This paper tests for the importance of nonpecuniary costs of unemployment using a longitudinal data-set on life-satisfaction of working-age men in Germany. The authors show that unemployment has a large detrimental effect on satisfaction after individual specific fixed effects are controlled for. The nonpecuniary effect is much larger than the effect that stems from the associated loss of income. Copyright 1998 by The London School of Economics and Political Science

Suggested Citation

  • Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  • Handle: RePEc:bla:econom:v:65:y:1998:i:257:p:1-15

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    References listed on IDEAS

    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Chung, Tai-Yeong, 1992. "On the Social Optimality of Liquidated Damage Clauses: An Economic Analysis," Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 280-305, April.
    3. repec:eme:rlepps:v:18:y:1999:i:1999:p:303-330 is not listed on IDEAS
    4. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    5. Jörn-Steffen Pischke, 2001. "Continuous training in Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(3), pages 523-548.
    6. Steven Shavell, 1980. "Damage Measures for Breach of Contract," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 466-490, Autumn.
    7. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    8. Aghion, Philippe & Dewatripont, Mathias & Rey, Patrick, 1994. "Renegotiation Design with Unverifiable Information," Econometrica, Econometric Society, vol. 62(2), pages 257-282, March.
    9. Kahn, Charles & Huberman, Gur, 1988. "Two-sided Uncertainty and "Up-or-Out" Contracts," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 423-444, October.
    10. Booth, Alison L. & Bryan, Mark L., 2002. "Who Pays for General Training? New Evidence for British Men and Women," IZA Discussion Papers 486, Institute for the Study of Labor (IZA).
    11. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-562, October.
    12. Katz, Eliakim & Ziderman, Adrian, 1990. "Shared investment in general training : the role of information," Policy Research Working Paper Series 535, The World Bank.
    13. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-1158, December.
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