Income or Leisure? On the Hidden Benefits of (Un-) Employment

Adrian Chadi and Clemens Hetschko

No 201706, IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU)

Abstract: We study the usually assumed trade-off between income and leisure in labor supply decisions using comprehensive German panel data. We compare non-employed individuals after plant closures with employed people regarding both income and time use as well as their subjective perceptions of these two factors. We find that the gain of non-working time translates intohigher satisfaction with free time, while time spent on hobbiesincreases to a lesser extent than home production. Additionally, satisfaction with family life increases, which may be a hidden benefit of being unemployed. In contrast, satisfaction with income strongly declines when becoming jobless. Identity utility from earning a living may play the role of a hidden benefit of employment. Finally, we examine subjective assessments of income and leisure as potential predictors for job take-up. Non-employed people are particularly likely to take up a job soon when they are dissatisfied with their income.

Keywords: labor supply; plant closure; leisure; work-family conflict; life satisfaction; income satisfaction; free time satisfaction; family satisfaction (search for similar items in EconPapers)
JEL-codes: D01 D13 I31 J22 J64 J65 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-eur, nep-hap, nep-lma and nep-ltv
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Income or leisure? On the hidden benefits of (un)employment (2025)
Working Paper: Income or Leisure? On the Hidden Benefits of (Un-)Employment (2017)
Working Paper: Income or Leisure? On the Hidden Benefits of (Un-)Employment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:iaa:dpaper:201706

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