HAPPY PEOPLE ARE LESS LIKELY TO BE UNEMPLOYED: PSYCHOLOGICAL EVIDENCE FROM PANEL DATA
Dusanee Kesavayuth () and
Vasileios Zikos ()
Contemporary Economic Policy, 2018, vol. 36, issue 2, 277-291
There is a large literature showing that unemployment reduces people's wellâ€ being. Yet little is known about the reverse possibility, namely that wellâ€ being itself may influence unemployment propensity. Understanding the potentials of human wellâ€ being in relation to unemployment is important as many developed countries are currently facing high unemployment rates. As wellâ€ being is likely to be endogenous, we use British panel data and implement Lewbel's novel empirical approach for identification. We show that higher wellâ€ being implies a negative causal effect on the probability of being unemployed. The result holds for two very different wellâ€ being measures: life satisfaction and a 12â€ item scale of mental health. As such, it provides new empirical evidence on the causal link between wellâ€ being and unemployment propensity. (JEL D03, I31)
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