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Don't Worry, Be Happy? Happiness and Reemployment

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  • Krause-Pilatus, Annabelle

    (IZA)

Abstract

Subjective well-being is primarily treated as an outcome variable in the economic literature. However, is happiness also a driver of behavior and life's outcomes? Rich survey data of recent entrants into unemployment in Germany show that a significant inverted U-shaped relationship exists between residual happiness and an unemployed individual's future reemployment probability and the reentry wage. Residual life satisfaction displays higher (or lower) satisfaction levels than would be predicted by a number of socioeconomic and demographic characteristics. This paper is the first to show that happiness is mainly a predictor for self-employment and less for standard reemployment. Related findings suggest that happiness matters for male unemployed, and the concept of locus of control is able to explain part of the effect. If reemployment and higher wages are considered desirable outcomes for the unemployed individual and society, the shape of the effect suggests an optimal level of happiness, which is not necessarily the highest.

Suggested Citation

  • Krause-Pilatus, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7107
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    Cited by:

    1. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    2. Z. Bilgen Susanlı, 2018. "Life satisfaction and unemployment in Turkey: evidence from Life Satisfaction Surveys 2004–2013," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(1), pages 479-499, January.
    3. Yulei Rao & Lixing Mei & Rui Zhu, 2016. "Happiness and Stock-Market Participation: Empirical Evidence from China," Journal of Happiness Studies, Springer, vol. 17(1), pages 271-293, February.
    4. 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).
    5. Patrick Arni & Marco Caliendo & Steffen Künn & Klaus Zimmermann, 2014. "The IZA evaluation dataset survey: a scientific use file," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-20, December.
    6. Baert, Stijn & De Visschere, Sarah & Schoors, Koen & Vandenberghe, Désirée & Omey, Eddy, 2016. "First depressed, then discriminated against?," Social Science & Medicine, Elsevier, vol. 170(C), pages 247-254.
    7. Dräger, Vanessa, 2015. "Do Employment Protection Reforms Affect Well-Being?," IZA Discussion Papers 9114, Institute of Labor Economics (IZA).
    8. Krause-Pilatus, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute of Labor Economics (IZA).
    9. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.
    10. Dukangqi Li & Weitao Shen, 2022. "Regional Happiness and Corporate Green Innovation: A Financing Constraints Perspective," Sustainability, MDPI, vol. 14(4), pages 1-25, February.
    11. Martin Binder & Alex Coad, 2014. "How satisfied are the self-employed? A life domain view," SPRU Working Paper Series 2014-17, SPRU - Science Policy Research Unit, University of Sussex Business School.

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    More about this item

    Keywords

    unemployment; job search; happiness; reemployment; Germany;
    All these keywords.

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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