 Income or leisure? On the hidden benefits of (un)employmentAdrian Chadi and Clemens Hetschko European Economic Review, 2025, vol. 171, issue C Abstract: Do unemployed people benefit from more free time, while consumption is the sole motive for employed people to accept a life with less available time? Does this apply equally to men and women? To inform ongoing policy debates on how to address the problem of unemployment, we provide a comprehensive discussion of the traditionally assumed trade-off between income and leisure in labor supply decisions, which has been contested for a variety of reasons. Using rich German panel data, we compare non-employed individuals after plant closures with employed individuals regarding their subjective well-being obtained from time use and income. We find that increased non-working time through unemployment translates into higher free-time satisfaction, while also improving satisfaction with family life, as a possible hidden benefit of being unemployed when having more time for home production. Meanwhile, there is a strong decline in satisfaction with household income, especially among unemployed men, which cannot be explained solely by a lower level of income. We inspect the role of social norms in this context and argue that individuals obtain identity utility through having a job that ensures being self-sufficient, as a hidden benefit of employment. Based on studying unemployed workers transitions into retirement and a separately conducted survey experiment, we provide strong evidence on the importance of the social norm of earning a living from work. Our experiment also shows that home production is a way of mitigating the pressure to comply with this norm, which is true for men and women alike. Keywords: Labor supply; Plant closure; Work-family conflict; Gender; Social norms; Income satisfaction; Free-time satisfaction; Family-life satisfaction (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:171:y:2025:i:c:s0014292124002083 DOI: 10.1016/j.euroecorev.2024.104879 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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