More Education Does Make You Happier – Unless You Are Unemployed

Alexander Bertermann, Daniel A. Kamhöfer and Hannah Schildberg-Hörisch

No 1192, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: This paper investigates the causal effect of education on life satisfaction, exploring effect heterogeneity along employment status. We use exogenous variation in compulsory schooling requirements and the build-up of new, academically more demanding schools, shifting educational attainment along the entire distribution of schooling. Leveraging plant closures and longitudinal information, we also address the endogeneity of employment status. We find a positive effect of education on life satisfaction for employed individuals, but a negative one for those without a job. We propose an aspiration-augmented utility function as a unifying explanation for the asymmetric effect of education on life satisfaction.

Keywords: Education; Life satisfaction; Employment status; Compulsory schooling reforms; School openings; Instrumental variable estimation (search for similar items in EconPapers)
JEL-codes: C26 I26 I31 (search for similar items in EconPapers)
Pages: 40 : Anh. p.
Date: 2023
New Economics Papers: this item is included in nep-hap and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp1192

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