![]() ![]() Nevertheless, neither paper differentiates voluntary and involuntary entry into unemployment. ( 2010) do not include sadness in their affective measures in constructing the U-index and net affect. They point out that the difference in findings between them and Knabe et al. In contrast, Krueger and Mueller ( 2012), based on weekly panel data of unemployed workers in New Jersey, find that the unemployed feel sadder over the course of the entire day than the employed and the estimates are similar regardless of controlling for unobserved individual heterogeneity by using fixed effects. They find that unemployed people are less satisfied with their life and report more negative feelings when engaged in similar activities than those who are employed, but duration-weighted average day-to-day subjective well-being is not different between the two groups because the unemployed use that time during which the employed are at work in more enjoyable ways. ( 2010), using a cross-sectional survey of long-term unemployed from Germany, first analyze the relationship between unemployment and affective measures of subjective well-being based on time use, such as the U-index and net affect, in addition to life satisfaction. Due to the lack of data, however, just one cognitive measure of subjective well-being, overall satisfaction with life, is analyzed in the papers based on the GSOEP. Footnote 1 Interestingly, the magnitudes of the effects of unemployment on life satisfaction are very similar between the fixed-effects estimations and those without fixed effects in most papers, suggesting that the bias due to unobserved individual heterogeneity is minimal in the pooled estimations without fixed effects. To overcome this problem, they identify the workers in their data who are involuntarily unemployed due to company closures and show that this involuntary entry into unemployment further lowers life satisfaction among German women, but not among German men. Kassenboehmer and Haisken-DeNew ( 2009) further point out that a decrease in job satisfaction may cause a worker to become voluntarily unemployed, rendering the fixed-effect estimates based on panel data still biased. 2001 Gerlach and Stephan 1996 Kassenboehmer and Haisken-DeNew 2009 Winkelmann and Winkelmann 1998). To control for such unobserved individual heterogeneity, other researchers employ individual fixed effects on panel data from the German Socio-Economic Panel (GSOEP) and provide causal evidence that unemployment does significantly lower life satisfaction (Clark et al. For example, people with intrinsically lower levels of subjective well-being are more likely to lose jobs. As they acknowledge, however, it is difficult to establish causality with their cross-sectional data. Finding that unemployed people have lower levels of mental well-being than those employed, they conclude that unemployment is not voluntary in general. In an effort to test the hypothesis that the rising unemployment in Britain is voluntary, Clark and Oswald ( 1994) analyze mental well-being scores from the British Household Panel Study. ![]() Since the seminal paper by Clark and Oswald ( 1994), economists have been increasingly interested in the connection between unemployment and subjective well-being.
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