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Don’t worry, be happy? Happiness and reemployment

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  • Krause, Annabelle

Abstract

This study investigates the effect of unemployed individuals’ happiness on their future labor market outcomes. It therefore acknowledges the possibility that happiness could also be a driver of behavior and influence life's outcomes. I use rich survey data from 2007 to 2009 of entrants into unemployment in Germany (the IZA Evaluation Dataset S) to calculate residual happiness, which displays higher (or lower) satisfaction levels than would be predicted by a number of demographic and socioeconomic characteristics. I find a statistically significant inverted U-shaped effect of residual happiness on an unemployed individual's future reemployment probability and reentry wage, even after controlling for demographic and socioeconomic characteristics, labor market histories and future job prospects. Further investigation offers three mechanisms that have not been previously shown in this context: (a) happiness is mainly a predictor for exit into self-employment rather than regular employment; (b) only male unemployed experience an effect of happiness on reemployment; and (c) the concept of locus of control and the personality traits of neuroticism and extraversion are main drivers of the baseline effect on regular reemployment and are able to explain the effect on reemployment for males.

Suggested Citation

  • Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
  • Handle: RePEc:eee:jeborg:v:96:y:2013:i:c:p:1-20 DOI: 10.1016/j.jebo.2013.09.002
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    Cited by:

    1. Baert, Stijn & De Visschere, Sarah & Schoors, Koen & Vandenberghe, Désirée & Omey, Eddy, 2016. "First depressed, then discriminated against?," Social Science & Medicine, Elsevier, vol. 170(C), pages 247-254.
    2. Yulei Rao & Lixing Mei & Rui Zhu, 2016. "Happiness and Stock-Market Participation: Empirical Evidence from China," Journal of Happiness Studies, Springer, vol. 17(1), pages 271-293, February.
    3. Patrick Arni & Marco Caliendo & Steffen Künn & Klaus Zimmermann, 2014. "The IZA evaluation dataset survey: a scientific use file," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-20, December.
    4. Krause, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute for the Study of Labor (IZA).
    5. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    6. Martin Binder & Alex Coad, 2016. "How Satisfied are the Self-Employed? A Life Domain View," Journal of Happiness Studies, Springer, vol. 17(4), pages 1409-1433, August.
    7. Adrian Chadi & Clemens Hetschko, 2017. "Income or Leisure? On the Hidden Benefits of (Un-) Employment," IAAEU Discussion Papers 201706, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    8. Dräger, Vanessa, 2015. "Do Employment Protection Reforms Affect Well-Being?," IZA Discussion Papers 9114, Institute for the Study of Labor (IZA).
    9. De Neve, Jan-Emmanuel & Diener, Ed & Tay, Louis & Xuereb, Cody, 2013. "The objective benefits of subjective well-being," LSE Research Online Documents on Economics 51669, London School of Economics and Political Science, LSE Library.
    10. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    Unemployment; Reemployment; Happiness; Job search;

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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