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Regional Unemployment and Norm-Induced Effects on Life Satisfaction

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  • Adrian Chadi

    () (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract

While rising unemployment generally reduces people’s happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study rejects this thesis for German panel data, however, and finds that individual unemployment is even more hurtful when regional unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one’s own living is lower. A comprehensive discussion reconciles these findings with the existing research and concludes that in order to find evidence for the often-described social-norm effect it is worthwhile to analyse disutility associated with benefit receipts.

Suggested Citation

  • Adrian Chadi, 2013. "Regional Unemployment and Norm-Induced Effects on Life Satisfaction," IAAEU Discussion Papers 201306, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  • Handle: RePEc:iaa:dpaper:201306
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    References listed on IDEAS

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    Cited by:

    1. repec:zbw:rwirep:0510 is not listed on IDEAS
    2. Howley, P. & Knight, S., 2016. "The externality cost of neighbour’s at work: Social norm induced effects on well-being," Health, Econometrics and Data Group (HEDG) Working Papers 16/34, HEDG, c/o Department of Economics, University of York.
    3. 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).
    4. 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.
    5. 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.
    6. repec:spr:qualqt:v:52:y:2018:i:1:d:10.1007_s11135-017-0479-6 is not listed on IDEAS
    7. Andreas Knabe & Ronnie Schöb & Joachim Weimann, 2012. "Partnership, Gender Roles and the Well-Being Cost of Unemployment," CESifo Working Paper Series 3932, CESifo Group Munich.
    8. 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).
    9. repec:spr:jhappi:v:18:y:2017:i:6:d:10.1007_s10902-016-9793-2 is not listed on IDEAS
    10. Drydakis, Nick, 2015. "The effect of unemployment on self-reported health and mental health in Greece from 2008 to 2013: A longitudinal study before and during the financial crisis," Social Science & Medicine, Elsevier, vol. 128(C), pages 43-51.
    11. Wolf, Tobias & Hetschko, Clemens & Schöb, Ronnie, 2016. "Income Support, (Un-)Employment and Well-Being," Annual Conference 2016 (Augsburg): Demographic Change 145860, Verein für Socialpolitik / German Economic Association.
    12. Ronnie Schöb, 2013. "Unemployment and Identity," CESifo Economic Studies, CESifo, vol. 59(1), pages 149-180, March.
    13. Johannes Vatter, 2012. "Well-Being in Germany: GDP and Unemployment Still Matter," Working Paper Series of the German Council for Social and Economic Data 196, German Council for Social and Economic Data (RatSWD).
    14. Vatter, Johannes, 2012. "Well-being in Germany: What explains the regional variation?," FZG Discussion Papers 50, University of Freiburg, Research Center for Generational Contracts (FZG).
    15. Howley, P.; & Knight, S.;, 2018. "Taking pleasure from neighbours’ misfortune: Comparison effects, social norms and the well-being of the unemployed," Health, Econometrics and Data Group (HEDG) Working Papers 18/02, HEDG, c/o Department of Economics, University of York.

    More about this item

    Keywords

    social norms; regional unemployment; individual unemployment; well-being; social benefits; labour market policies;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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