Elusive Effects of Unemployment on Happiness

Working Papers 210 Petri Böckerman, Pekka llmakunnas

This paper explores the connection between unemployment and subjective well-being in Finland by using cross-sections for the years 1990, 1996 and 2000 from World Values Surveys. An unprecedented increase in the national unemployment rate (from 3 to 17 per cent) did not produce a drop in the mean level of subjective well-being. Experiencing unemployment personally reduces life satisfaction, but does not have a significant effect on happiness in ordered logit estimation. However, generalized ordered logit estimation reveals that being unemployed has a negative effect on happiness at lower happiness scores, but no significant effect at high happiness levels.

Keywords: Happiness, unhappiness, life satisfaction, unemployment
Published: 1.1.2005
JEL: C30, J28, J31
ISBN: 952-209-009-3
ISSN: 1795-1801
Publication (PDF)