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The Effect of Subsidized Employment on Happiness

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  • Benjamin Crost

Abstract

While a large body of evidence suggests that unemployment and self-reported happiness are negatively correlated, it is not clear whether this reflects a causal effect of unemployment on happiness and whether subsidized employment can increase the happiness of the unemployed. To close this gap, this paper estimates the causal effect of a type of subsidized employment projects - Germany's Arbeitsbeschaffungsmaßnahmen - on self-reported happiness. Results from matching and fixed effects estimators suggest that subsidized employment has a large and statistically significant positive effect on the happiness of individuals who would otherwise have been unemployed. Detailed panel data on pre- and post-project happiness suggests that this effect can neither be explained by self-selection of happier individuals into employment nor by the higher incomes of the employed.

Suggested Citation

  • Benjamin Crost, 2011. "The Effect of Subsidized Employment on Happiness," SOEPpapers on Multidisciplinary Panel Data Research 384, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp384
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    1. A case for workfare
      by chris dillow in Stumbling and Mumbling on 2012-02-20 19:29:17

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    More about this item

    Keywords

    Happiness; life satisfaction; unemployment; subsidized employment;
    All these keywords.

    JEL classification:

    • 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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