Heterogeneity in the Relationship between Unemployment and Subjective Well-Being: A Quantile Approach

Levy Economics Institute, Working Papers Series No. 808

32 Pages Posted: 25 Jun 2014

See all articles by Martin Binder

Martin Binder

University of the German Federal Armed Forces - Universität der Bundeswehr München; Bard College - The Levy Economics Institute

Alex Coad

Waseda University

Date Written: June 24, 2014

Abstract

Unemployment has been robustly shown to strongly decrease subjective well-being (or "happiness"). In the present paper, we use panel quantile regression techniques in order to analyze to what extent the negative impact of unemployment varies along the subjective well -- being distribution. In our analysis of British Household Panel Survey data (1996-2008) we find that, over the quantiles of our subjective well-being variable, individuals with high well-being suffer less from becoming unemployed. A similar but stronger effect of unemployment is found for a broad mental well-being variable (GHQ-12). For happy and mentally stable individuals, it seems their higher well-being acts like a safety net when they become unemployed. We explore these findings by examining the heterogeneous unemployment effects over the quantiles of satisfaction with various life domains.

Keywords: Subjective well-being, unemployment, quantile analysis, heterogeneity, British household panel survey, domain satisfaction

JEL Classification: I31, J01, J64

Suggested Citation

Binder, Martin and Coad, Alex, Heterogeneity in the Relationship between Unemployment and Subjective Well-Being: A Quantile Approach (June 24, 2014). Levy Economics Institute, Working Papers Series No. 808, Available at SSRN: https://ssrn.com/abstract=2458528 or http://dx.doi.org/10.2139/ssrn.2458528

Martin Binder (Contact Author)

University of the German Federal Armed Forces - Universität der Bundeswehr München ( email )

Werner-Heisenberg-Weg 39
Neubiberg
Munich, 85579
Germany

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

Alex Coad

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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