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Can workfare programs offset the negative effect of unemployment on subjective well-being?

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  • Crost, Benjamin

Abstract

Previous research suggests that unemployment negatively affects indicators of mental health and well-being, but it remains unclear whether active labor market policy can offset this effect. This paper examines a workfare program that was a key part of Germany’s active labor market policy for over 30 years. Fixed effects panel estimates suggest that participation in the workfare program offset most, though not all, of the negative effect of unemployment on subjective life satisfaction. Robustness tests find no evidence that this estimate is due to non-parallel time-trends, unobserved shocks in the pre-treatment period, adaptation to unemployment or differences in regional unemployment rates. These results suggest that active labor market policies can help reduce the negative psychological effect of unemployment.

Suggested Citation

  • Crost, Benjamin, 2016. "Can workfare programs offset the negative effect of unemployment on subjective well-being?," Economics Letters, Elsevier, vol. 140(C), pages 42-47.
  • Handle: RePEc:eee:ecolet:v:140:y:2016:i:c:p:42-47
    DOI: 10.1016/j.econlet.2015.12.007
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    1. repec:taf:applec:v:49:y:2017:i:13:p:1311-1325 is not listed on IDEAS
    2. Andreas Knabe & Ronnie Schöb & Joachim Weimann, 2017. "The subjective well-being of workfare participants: insights from a day reconstruction survey," Applied Economics, Taylor & Francis Journals, vol. 49(13), pages 1311-1325, March.
    3. Odermatt, Reto & Stutzer, Alois, 2017. "Subjective Well-Being and Public Policy," IZA Discussion Papers 11102, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Life satisfaction; Well-being; Unemployment; Active labor market policy; Workfare;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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