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
Date Written: June 24, 2014
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
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