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Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector

Simon Luechinger (), Stephan Meier () and Alois Stutzer ()

Journal of Human Resources, 2010, vol. 45, issue 4, 998-1045

Abstract: High unemployment rates entail substantial costs to the working population in terms of reduced subjective well-being. This paper studies the importance of individual economic security, in particular job security, by exploiting sector-specific institutional differences in the exposure to economic shocks. Public servants have stricter dismissal protection and face a lower risk of their organization becoming bankrupt than private sector employees. The empirical results from individual panel data for Germany and repeated cross-sectional data for the United States and Europe show that private sector employees’ subjective well-being reacts indeed much more sensitive to fluctuations in unemployment rates than public sector employees’.

Date: 2010
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Related works:
Working Paper: Why does unemployment hurt the employed? Evidence from the life satisfaction gap between the public and the privat sector (2008) Downloads
Working Paper: Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap between the Public and Private Sectors (2008) Downloads
Working Paper: Why does unemployment hurt the employed?: evidence from the life satisfaction gap between the public and private sectors (2008) Downloads
Working Paper: Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and the Private Sector (2008) Downloads
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