Who benefits from labor market institutions? Evidence from surveys of life satisfaction

Carsten Ochsen and Heinz Welsch

Journal of Economic Psychology, 2012, vol. 33, issue 1, 112-124

Abstract: This paper investigates the welfare effects of labor market institutions, placing an emphasis on how the institutions’ effects are differentiated by socio-demographic subgroups. We study how life satisfaction is affected by employment protection and the level and duration of unemployment benefit payments. Using data for almost 370,000 individuals in ten European countries, 1975–2002, we find that more employment protection and a higher benefit replacement rate increase the life satisfaction of the average citizen. At the subgroup level, different segments of the population are affected differently by the two categories of labor market institutions. While employment protection is valued especially by employed persons of intermediate age, it is less beneficial for women/housewives and for older persons. More generous unemployment insurance is valued especially by these latter subgroups and by the unemployed.

Keywords: Employment protection; Unemployment benefit; Macroeconomic uncertainty; Life satisfaction; Happiness (search for similar items in EconPapers)
JEL-codes: D71 E24 E60 I31 J30 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:1:p:112-124

DOI: 10.1016/j.joep.2011.08.007

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