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Can subjective well-being predict unemployment length ?

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  • Mavridis, Dimitris

Abstract

This paper uses 16 waves of panel data from the British Household Panel Survey to evaluate the role of subjective well-being in determining labor market transitions. It confirms a previous finding in the literature: individuals report a fall in their happiness when they lose a job, but they report a smaller fall when they are surrounded by unemployed peers, an effect called the"social norm". The main results of interest are that job search effort and unemployment duration areaffected by the utility differential between having a job and being unemployed. Since this differential is also affected by the social norm, it implies that when unemployment increases, the unemployed are happier and they reduce their search effort. These results indicate that unemployment hysteresis has labor supply causes.

Suggested Citation

  • Mavridis, Dimitris, 2010. "Can subjective well-being predict unemployment length ?," Policy Research Working Paper Series 5293, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5293
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    Cited by:

    1. Alexander Krauss & Carol Graham, 2013. "Subjective wellbeing in Colombia: some insights on vulnerability, job security, and relative incomes," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 1(3), pages 233-260.
    2. Krause, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute for the Study of Labor (IZA).
    3. Anne C. Gielen & Jan C. Ours, 2014. "Unhappiness and Job Finding," Economica, London School of Economics and Political Science, vol. 81(323), pages 544-565, July.
    4. Helliwell, John & Huang, Haifang, 2011. "New measures of the costs of unemployment: Evidence from the subjective well-being of 2.3 million Americans," Working Papers 2011-3, University of Alberta, Department of Economics.
    5. Wulfgramm, Melike, 2012. "Country-specific life satisfaction effects of unemployment: Does labour market policy matter?," Working papers of the ZeS 07/2012, University of Bremen, Centre for Social Policy Research (ZeS).
    6. John F. Helliwell & Haifang Huang, 2014. "New Measures Of The Costs Of Unemployment: Evidence From The Subjective Well-Being Of 3.3 Million Americans," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1485-1502, October.
    7. 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

    Labor Markets; Labor Policies; Population Policies; Youth and Governance; Economic Theory&Research;

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