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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. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    2. Z. Bilgen Susanlı, 2018. "Life satisfaction and unemployment in Turkey: evidence from Life Satisfaction Surveys 2004–2013," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(1), pages 479-499, January.
    3. 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.
    4. 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).
    5. 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.
    6. 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.
    7. Dräger, Vanessa, 2015. "Do Employment Protection Reforms Affect Well-Being?," IZA Discussion Papers 9114, Institute of Labor Economics (IZA).
    8. Krause-Pilatus, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute of Labor Economics (IZA).
    9. 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.
    10. Dukangqi Li & Weitao Shen, 2022. "Regional Happiness and Corporate Green Innovation: A Financing Constraints Perspective," Sustainability, MDPI, vol. 14(4), pages 1-25, February.
    11. Martin Binder & Alex Coad, 2014. "How satisfied are the self-employed? A life domain view," SPRU Working Paper Series 2014-17, SPRU - Science Policy Research Unit, University of Sussex Business School.

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    More about this item

    Keywords

    Unemployment; Reemployment; Happiness; Job search;
    All these keywords.

    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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