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