IDEAS home Printed from https://ideas.repec.org/p/diw/diwsop/diw_sp384.html
   My bibliography  Save this paper

The Effect of Subsidized Employment on Happiness

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.373756.de/diw_sp0384.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gary Marks & Nicole Fleming, 1999. "Influences and Consequences of Well-being Among Australian Young People: 1980–1995," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 46(3), pages 301-323, March.
    2. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    3. Blanchflower, David G. & Oswald, Andrew J., 2008. "Hypertension and happiness across nations," Journal of Health Economics, Elsevier, vol. 27(2), pages 218-233, March.
    4. KennethJ. Arrow & ParthaS. Dasgupta, 2009. "Conspicuous Consumption, Inconspicuous Leisure," Economic Journal, Royal Economic Society, vol. 119(541), pages 497-516, November.
    5. Marco Caliendo & Reinhard Hujer & Stephan Thomsen, 2008. "Identifying effect heterogeneity to improve the efficiency of job creation schemes in Germany," Applied Economics, Taylor & Francis Journals, vol. 40(9), pages 1101-1122.
    6. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
    7. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    8. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    9. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    10. Alberto Abadie & Guido W. Imbens, 2011. "Bias-Corrected Matching Estimators for Average Treatment Effects," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(1), pages 1-11, January.
    11. Edlin Aaron S. & Phelps Edmund, 2009. "Getting Serious about Job Creation: Part I," The Economists' Voice, De Gruyter, vol. 6(5), pages 1-5, April.
    12. Tore Ellingsen & Magnus Johannesson, 2007. "Paying Respect," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 135-150, Fall.
    13. Hujer, Reinhard & Caliendo, Marco & Thomsen, Stephan L., 2004. "New evidence on the effects of job creation schemes in Germany--a matching approach with threefold heterogeneity," Research in Economics, Elsevier, vol. 58(4), pages 257-302, December.
    14. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    15. Milton Friedman, 1957. "The Permanent Income Hypothesis," NBER Chapters, in: A Theory of the Consumption Function, pages 20-37, National Bureau of Economic Research, Inc.
    16. Bernhard, Sarah & Hohmeyer, Katrin & Jozwiak, Eva & Koch, Susanne & Kruppe, Thomas & Stephan, Gesine & Wolff, Joachim, 2008. "Aktive Arbeitsmarktpolitik in Deutschland und ihre Wirkungen," IAB-Forschungsbericht 200802, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Phelps, Edmund S, 1994. "Low-Wage Employment Subsidies versus the Welfare State," American Economic Review, American Economic Association, vol. 84(2), pages 54-58, May.
    18. Nick Carroll, 2007. "Unemployment and Psychological Well‐being," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 287-302, September.
    19. Petri Böckerman & Pekka Ilmakunnas, 2009. "Unemployment and self‐assessed health: evidence from panel data," Health Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 161-179, February.
    20. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    21. Frick, Joachim R. & Jenkings, Stephen P. & Lillard, Dean R. & Lipps, Oliver & Wooden, Mark, 2007. "The Cross-National Equivalent File (CNEF) and Its Member Country Household Panel Studies," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 127(4), pages 627-654.
    22. Alberto Abadie & Guido W. Imbens, 2002. "Simple and Bias-Corrected Matching Estimators for Average Treatment Effects," NBER Technical Working Papers 0283, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A case for workfare
      by chris dillow in Stumbling and Mumbling on 2012-02-20 19:29:17

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Livani, Talajeh & Graham, Carol, 2019. "Do social protection programs improve life satisfaction? Evidence from Iraq," World Development Perspectives, Elsevier, vol. 16(C).
    2. Tcherneva Pavlina R., 2012. "The Job Guarantee: Delivering the Benefits That Basic Income Only Promises – A Response to Guy Standing," Basic Income Studies, De Gruyter, vol. 7(2), pages 66-87, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Lars Kunze & Nicolai Suppa, 2014. "Bowling Alone or Bowling at All? The Effect of Unemployment on Social Participation," Ruhr Economic Papers 0510, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Kunze, Lars & Suppa, Nicolai, 2017. "Bowling alone or bowling at all? The effect of unemployment on social participation," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 213-235.
    4. Suppa, Nicolai, 2021. "Unemployment and subjective well-being," GLO Discussion Paper Series 760, Global Labor Organization (GLO).
    5. Stavrova, Olga & Schlösser, Thomas & Fetchenhauer, Detlef, 2011. "Are the unemployed equally unhappy all around the world? The role of the social norms to work and welfare state provision in 28 OECD countries," Journal of Economic Psychology, Elsevier, vol. 32(1), pages 159-171, February.
    6. repec:zbw:rwirep:0510 is not listed on IDEAS
    7. Johannes Vatter, 2012. "Well-Being in Germany: GDP and Unemployment Still Matter," RatSWD Working Papers 196, German Data Forum (RatSWD).
    8. Milena Nikolova & Sinem H. Ayhan, 2019. "Your spouse is fired! How much do you care?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 799-844, July.
    9. Johannes Vatter, 2012. "Well-Being in Germany: What Explains the Regional Variation?," SOEPpapers on Multidisciplinary Panel Data Research 435, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Adrian Chadi, 2014. "Regional unemployment and norm-induced effects on life satisfaction," Empirical Economics, Springer, vol. 46(3), pages 1111-1141, May.
    11. Andreas Knabe & Steffen Rätzel & Ronnie Schöb & Joachim Weimann, 2010. "Dissatisfied with Life but Having a Good Day: Time-use and Well-being of the Unemployed," Economic Journal, Royal Economic Society, vol. 120(547), pages 867-889, September.
    12. Montizaan, Raymond M. & Vendrik, Maarten C.M., 2014. "Misery Loves Company: Exogenous shocks in retirement expectations and social comparison effects on subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 1-26.
    13. Matteo Picchio & Michele Ubaldi, 2024. "Unemployment and health: A meta‐analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1437-1472, September.
    14. David G. Blanchflower, 2009. "International Evidence on Well-Being," NBER Chapters, in: Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being, pages 155-226, National Bureau of Economic Research, Inc.
    15. Eva M. Berger, 2009. "Maternal Employment and Happiness: The Effect of Non-Participation and Part-Time Employment on Mothers' Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 178, DIW Berlin, The German Socio-Economic Panel (SOEP).
    16. Andreas Knabe & Steffen Ratzel, 2011. "Quantifying the psychological costs of unemployment: the role of permanent income," Applied Economics, Taylor & Francis Journals, vol. 43(21), pages 2751-2763.
    17. 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).
    18. Kleibrink, Jan, 2014. "Sick of your Job? – Negative Health Effects from Non-Optimal Employment," Ruhr Economic Papers 514, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    19. Adrian Chadi, 2012. "Employed But Still Unhappy? On the Relevance of the Social Work Norm," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(1), pages 1-26.
    20. 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).
    21. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. SOEP based publications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwsop:diw_sp384. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/sodiwde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.