Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and the Private Sector
High rates of unemployment 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, in workers' well-being by exploiting sectorspecific institutional differences in the exposure to economic shocks. Public servants have stricter dismissal protection and face a lower risk of their organization's bankruptcy than private sector employees. The empirical results for individual panel data for Germany and repeated cross-sectional data for the United States and the European Union show that the sensitivity of subjective well-being to fluctuations in unemployment rates is much lower in the public sector than in the private. This suggests that increased economic insecurity constitutes an important welfare loss associated with high general unemployment.
Year of publication: |
2008
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Authors: | Luechinger, Simon ; Meier, Stephan ; Stutzer, Alois |
Publisher: |
Basel : University of Basel, Center of Business and Economics (WWZ) |
Subject: | Arbeitslosigkeit | Beschäftigungssicherung | Zufriedenheit | Privatwirtschaft | Vergleich | Öffentlicher Dienst | Panel | Schätzung | Deutschland | USA | EU-Staaten | Unemployment | life satisfaction | job security | public sector |
Saved in:
freely available
Series: | WWZ Working Paper ; 03/08 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 10.5451/unibas-ep15792 [DOI] 560926529 [GVK] hdl:10419/123390 [Handle] RePEc:bsl:wpaper:2008/03 [RePEc] |
Classification: | E24 - Employment; Unemployment; Wages ; I31 - General Welfare; Basic Needs; Quality of Life ; J30 - Wages, Compensation, and Labor Costs. General ; J45 - Public Sector Labor Markets ; J64 - Unemployment: Models, Duration, Incidence, and Job Search |
Source: |
Persistent link: https://www.econbiz.de/10011390631