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More Education Does Make You Happier – Unless You Are Unemployed

Author

Listed:
  • Alexander Bertermann
  • Daniel A. Kamhöfer
  • Hannah Schildberg-Hörisch

Abstract

This paper investigates the causal effect of education on life satisfaction, exploring effect heterogeneity along employment status. We use exogenous variation in compulsory schooling requirements and the build-up of new, academically more demanding schools, shifting educational attainment along the entire distribution of schooling. Leveraging plant closures and longitudinal information, we also address the endogeneity of employment status. We find a positive effect of education on life satisfaction for employed individuals, but a negative one for those without a job. We propose an aspiration-augmented utility function as a unifying explanation for the asymmetric effect of education on life satisfaction.

Suggested Citation

  • Alexander Bertermann & Daniel A. Kamhöfer & Hannah Schildberg-Hörisch, 2023. "More Education Does Make You Happier – Unless You Are Unemployed," SOEPpapers on Multidisciplinary Panel Data Research 1192, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp1192
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.882301.de/diw_sp1192.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Education; Life satisfaction; Employment status; Compulsory schooling reforms; School openings; Instrumental variable estimation;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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