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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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    Cited by:

    1. Ivanov, Boris & Pfeiffer, Friedhelm & Pohlan, Laura, 2020. "Do job creation schemes improve the social integration and well-being of the long-term unemployed?," Labour Economics, Elsevier, vol. 64(C).
    2. Hetschko, Clemens & Knabe, Andreas & Schöb, Ronnie, 2021. "Happiness, Work, and Identity," GLO Discussion Paper Series 783, Global Labor Organization (GLO).
    3. 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.
    4. Picchio, Matteo & Ubaldi, Michele, 2022. "Unemployment and Health: A Meta-Analysis," GLO Discussion Paper Series 1128, Global Labor Organization (GLO).
    5. Cseh-Papp, Imola & Varga, Erika, 2020. "Labour Market Effects Of Public Work: Hungary’S Example," Acta Carolus Robertus, Karoly Robert University College, vol. 0(Number 1).
    6. Caliendo, Marco, 2019. "Health Effects of Labor Market Policies: Evidence from Drug Prescriptions," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203573, Verein für Socialpolitik / German Economic Association.
    7. Eleftherios Goulas & Athina Zervoyianni, 2023. "Suicide mortality, long‐term unemployment, and labor‐market policies: Evidence from European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1112-1139, October.
    8. Senhu Wang & Adam Coutts & Brendan Burchell & Daiga KamerÄ de & Ursula Balderson, 2021. "Can Active Labour Market Programmes Emulate the Mental Health Benefits of Regular Paid Employment? Longitudinal Evidence from the United Kingdom," Work, Employment & Society, British Sociological Association, vol. 35(3), pages 545-565, June.
    9. Odermatt, Reto & Stutzer, Alois, 2017. "Subjective Well-Being and Public Policy," IZA Discussion Papers 11102, Institute of Labor Economics (IZA).
    10. Caliendo, Marco & Tübbicke, Stefan, 2019. "Do Start-Up Subsidies for the Unemployed Affect Participants' Well-Being? A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies," IZA Discussion Papers 12755, Institute of Labor Economics (IZA).
    11. Alic Birca, 2023. "Active Labor Market Policies In The Republic Of Moldova: Implications For Increasing Employment," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 77-85, February.
    12. Suppa, Nicolai, 2021. "Unemployment and subjective well-being," GLO Discussion Paper Series 760, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Life satisfaction; Well-being; Unemployment; Active labor market policy; Workfare;
    All these keywords.

    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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