Can Subjective Well-Being Predict Unemployment Length?
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 the...
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| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100526161301 http://hdl.handle.net/10986/3807 |
| Summary: | 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 are
affected 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. |
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