Regional Unemployment and Norm-Induced Effects on Life Satisfaction
26 Pages Posted: 13 Jul 2011
Date Written: July 2011
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, however, rejects this thesis for German panel data and finds individual unemployment to be even more hurtful when aggregate 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.
Keywords: social norms, unemployment, well-being, social benefits, labour market policies
JEL Classification: I3, J6
Suggested Citation: Suggested Citation