The cyclical component of GDP and life satisfaction: The impact of the Mediterranean welfare system

The study of happiness and economics indicates a paradox: rising income has not led to increases in long term levels of life satisfaction. Evidence shows that citizens adapt to the growth of GDP, but an important difference among certain countries in connection with life satisfaction and the deviation from trend growth has been found: Spain, Italy, Portugal and Greece adapt to the trend growth of their economies; other European countries, however, do not. This suggests that some characteristics of their welfare state, such as the inability to create sufficient equity might leave their citizens more dependent on economic variables such as rising income. Only in boom times can the young, uneducated or the elderly find access to the otherwise restricted labor market and have a chance to escape the poverty trap. In this regard the paper places special emphasis on the issue of global competition by linking the subject with the current state of the European Union.