Stephan Meier

Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap Between the Public and the Private Sector

Coauthor(s): Simon Luechinger, Alois Stutzer.

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'.

Source: Journal of Human Resources
Exact Citation:
Luechinger, Simon, Stephan Meier, and Alois Stutzer. "Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap Between the Public and the Private Sector." Journal of Human Resources 45, no. 4 (Fall 2010): 998-1045.
Volume: 45
Number: 4
Pages: 998-1045
Date: Fall 2010