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How to Distinguish Voluntary from Involuntary Unemployment: On the Relationship between the Willingness to Work and Unemployment-Induced Unhappiness

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  • Adrian Chadi

Abstract

Studies investigating the determinants of happiness show that unemployment causes high distress for most affected persons. Researchers conclude that the amount of this disutility demonstrates the involuntariness of unemployment. This paper applies the happiness research approach to German panel data in order to revive the underlying economic question of whether unemployment is voluntary or involuntary. Accordingly, the decline in life satisfaction associated with unemployment is related to the willingness to work. The results of the econometric investigation indicate a very strong connection between unemployment-induced disutility and willingness to work, so that it is possible to divide unemployed individuals into certain categories, according to the potential voluntariness of unemployment. While there is a minority which can truly be regarded as voluntarily unemployed, most unemployed people actively search for work and suffer far more from unemployment than indicated by previous happiness research studies. A subsequent discussion includes a critical juxtaposition of the findings with policies such as the recent German labour market reforms. Copyright © 2010 Blackwell Publishing Ltd.

Suggested Citation

  • Adrian Chadi, 2010. "How to Distinguish Voluntary from Involuntary Unemployment: On the Relationship between the Willingness to Work and Unemployment-Induced Unhappiness," Kyklos, Wiley Blackwell, vol. 63(3), pages 317-329, August.
  • Handle: RePEc:bla:kyklos:v:63:y:2010:i:3:p:317-329
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    References listed on IDEAS

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    1. Conny Wunsch & Michael Lechner, 2008. "What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes," Kyklos, Wiley Blackwell, vol. 61(1), pages 134-174, February.
    2. Assar Lindbeck, 1996. "The West European employment problem," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(4), pages 609-637, December.
    3. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-1831, November.
    4. Alois Stutzer & Rafael Lalive, 2004. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 696-719, June.
    5. repec:hhs:iuiwop:466 is not listed on IDEAS
    6. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    7. Bruno S. Frey, 2008. "Happiness: A Revolution in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062771, January.
    8. Nick Carroll, 2007. "Unemployment and Psychological Well-being," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 287-302, September.
    9. Lindenberg, Siegwart, 2001. "Intrinsic Motivation in a New Light," Kyklos, Wiley Blackwell, vol. 54(2-3), pages 317-342.
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    Cited by:

    1. Adrian Chadi, 2012. "Employed But Still Unhappy? On the Relevance of the Social Work Norm," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(1), pages 1-26.
    2. Adrian Chadi, 2014. "Regional unemployment and norm-induced effects on life satisfaction," Empirical Economics, Springer, vol. 46(3), pages 1111-1141, May.
    3. Ngai, Steven Sek-yum & Cheung, Chau-kiu & Yuan, Rui & Lin, Shen, 2016. "Work motivation of unemployed youths: Moderating effects of financial dependence on parents," Children and Youth Services Review, Elsevier, vol. 71(C), pages 157-165.
    4. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    5. Peter Meer, 2014. "Gender, Unemployment and Subjective Well-Being: Why Being Unemployed Is Worse for Men than for Women," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 115(1), pages 23-44, January.
    6. Thomas Wai-Kee Yuen & Winnie Wan-Ling Chu, 2015. "Happiness in ASEAN member states," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 2(1), pages 69-83.

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