Working Paper: NBER ID: w16829
Authors: John F. Helliwell; Haifang Huang
Abstract: Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.
Keywords: Unemployment; Subjective Wellbeing; Job Security; Indirect Effects
JEL Codes: E24; H23; J64; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment (J64) | nonpecuniary costs of unemployment (J65) |
| local unemployment rate (J64) | subjective wellbeing (I31) |
| anticipation of future increases in local unemployment (J65) | subjective wellbeing (I31) |
| job security (J28) | subjective wellbeing (I31) |