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How to Distinguish Voluntary from Involuntary Unemployment: On the Relationship between the Willingness to Work and Unemployment‐Induced Unhappiness
Author(s) -
Chadi Adrian
Publication year - 2010
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.2010.00476.x
Subject(s) - unemployment , happiness , economics , voluntariness , life satisfaction , work (physics) , german , distress , labour economics , involuntary unemployment , demographic economics , psychology , social psychology , macroeconomics , political science , mechanical engineering , engineering , history , archaeology , law , psychotherapist
SUMMARY Studies investigating the determinants of happiness show that unemployment causes high distress for most affected persons. Researchers conclude that the amount of this disutility demonstrates the involuntariness of unemployment. This paper applies the happiness research approach to German panel data in order to revive the underlying economic question of whether unemployment is voluntary or involuntary. Accordingly, the decline in life satisfaction associated with unemployment is related to the willingness to work. The results of the econometric investigation indicate a very strong connection between unemployment‐induced disutility and willingness to work, so that it is possible to divide unemployed individuals into certain categories, according to the potential voluntariness of unemployment. While there is a minority which can truly be regarded as voluntarily unemployed, most unemployed people actively search for work and suffer far more from unemployment than indicated by previous happiness research studies. A subsequent discussion includes a critical juxtaposition of the findings with policies such as the recent German labour market reforms.