Skip to main content

Advertisement

SpringerLink
Log in

Wellbeing at Work and the Great Recession: The Effect of Others’ Unemployment

  • Research Paper
  • Published:
Journal of Happiness Studies Aims and scope Submit manuscript

Abstract

The recent recession has generated a tremendous increase in unemployment rates in Spain. In this paper we use a very rich repeated cross-section dataset on workers’ job conditions, together with regional unemployment rates, to investigate whether peers’ unemployment affects individuals’ job satisfaction. We find that, once perceived job stability is controlled for, peers’ unemployment shows a positive effect on individuals’ wellbeing at work, greater and more precisely estimated for men and private-sector workers. The impact is highly non-linear and the greatest effect is found for unemployment rates exceeding 10 %. Interestingly, the results are robust to controlling for workforce selection.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. This monetary value for a change in the unemployment rate is obtained by dividing β 2 by the coefficient for the logarithm of monthly wages: 0.010/0.153 = 6.5 %. For an average monthly wage of 1430, it implies a compensating variation of €95. The numbers provided in the text correspond to a 10 percentage point increase in the unemployment rate. In comparison, the compensating variation for a 1 point change on the 10 point scale of job security is approximately 100 %.

References

  • Akerlof, G. (1980). A theory of social custom, of which unemployment may be one consequence. Quarterly Journal of Economics, 94(4), 749–775.

    Article  Google Scholar 

  • Ásgeirsdóttir, T. L., Corman, H., Noonan, K., Ólafsdóttir, P., & Reichman, N. E. (2012). Are recessions good for your health behaviors? Impacts of the economic crisis in Iceland. NBER working papers series, 18233.

  • Askildsen, J. E., Bratberg, E., & Nilsen, A. (2005). Unemployment, labor force composition and sickness absence: A panel data study. Health Economics, 14, 1087–1101.

    Article  Google Scholar 

  • Bentolila, S., Cahuc, P., Dolado, J. J., & Le Barbanchon, T. (2010). Two-tier labor markets in the great recession: France vs. Spain. IZA discussion papers 5340.

  • Blanchflower, D., & Oswald, A. (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 87(7–8), 1359–1386.

    Article  Google Scholar 

  • Böckerman, P., & Ilmakunnas, P. (2010). The job satisfaction-productivity nexus: A study using matched survey and register data. Munich Personal RePEc Archive (MPRA), 17, June.

  • Borjas, G. J. (1979). Job satisfaction, wages and unions. Journal of Human Resources, 14, 21–40.

    Article  Google Scholar 

  • Borra, C., & Gómez, F. (2012). Satisfacción Laboral y Salario: ¿Compensa la Renta Laboral las Condiciones no Monetarias del Trabajo? Revista de Economía Aplicada, 60, 25–51.

    Google Scholar 

  • Borra, C., Sevilla, A., & Gershuny, J. (2013). Calibrating time-use estimates for the British household panel survey. Social Indicators Research, 114, 1211–1224.

    Article  Google Scholar 

  • Clark, A. E. (1997). Job satisfaction and gender: Why are women so happy at work? Labour Economics, 4, 341–372.

    Article  Google Scholar 

  • Clark, A. E. (2003). Unemployment as a social norm: Psychological evidence from panel data. Journal of Labor Economics, 21, 323–351.

    Article  Google Scholar 

  • Clark, A., Knabe, A., & Rätzel, S. (2010). Boon or bane? Others’ unemployment, well-being and job insecurity. Labour Economics, 17, 52–61.

    Article  Google Scholar 

  • Clark, A. E., & Oswald, A. J. (1994). Unhappiness and unemployment. The Economic Journal, 104, 648–659.

    Article  Google Scholar 

  • Clark, A. E., & Oswald, A. J. (1996). Satisfaction and comparison income. Journal of Public Economics, 61, 359–381.

    Article  Google Scholar 

  • Corneliben, T. (2009). The interaction of job satisfaction, job search, and job changes. An empirical investigation with German panel data. Journal of Happiness Studies, 10(3), 367–384.

    Article  Google Scholar 

  • D’Ambrosio, C., & Frick, J. R. (2012). Individual wellbeing in a dynamic perspective. Economica, 79(314), 284–302.

    Article  Google Scholar 

  • Di Tella, R., Macculloch, R. J., & Oswald, A. J. (2001). Preferences over inflation and unemployment: Evidence from surveys of happiness. American Economic Review, 91(1), 335–341.

    Article  Google Scholar 

  • Di Tella, R., Macculloch, R. J., & Oswald, A. J. (2003). The macroeconomics of happiness. The Review of Economics and Statistics, 85(4), 809–827.

    Article  Google Scholar 

  • Drydakis, N. (2015). The effect of unemployment on self-reported health and mental health in Greece from 2008 to 2013: A longitudinal study before and during the financial crisis. Social Science and Medicine, 128, 43–51.

    Article  Google Scholar 

  • Duesenberry, J. (1949). Income, saving and the theory of consumer behavior. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Easterlin, R. (1974). Does economics growth improve the human a lot? Some empirical evidence. In P. A. Davis & M. W. Reder (Eds.), Nations and households in economic growth. New York: Academy Press.

    Google Scholar 

  • Eggers, A., Gaddy, C., & Grahan, C. (2006). Well-being and unemployment in Russia in the 1990s: Can society’s suffering be individuals’ solace? The Journal of Socio-Economics, 35, 209–242.

    Article  Google Scholar 

  • Ferrer-i-carbonell, A., & Frijters, P. (2004). How important is methodology for the estimates of the determinants of happiness? The Economic Journal, 114(497), 641–659.

    Article  Google Scholar 

  • Freeman, R. B. (1978). Job satisfaction as an economic variable. American Economic Review, Papers and Proceedings, 68, 135–141.

    Google Scholar 

  • Frey, B., & Stutzer, A. (2002). What can economists learn from happiness research? Journal of Economic Literature, 40, 402–435.

    Article  Google Scholar 

  • García-Serrano, C. (2011). Does size matter? The influence of firm size on working conditions, job satisfaction and quit intentions. Scottish Journal of Political Economy, 58(2), 221–247.

    Article  Google Scholar 

  • Gregg, P., Washbrook, E., Propper, C., & Burgess, S. (2005). The effects of a mother’s return to work decision on child development in the UK. The Economic Journal, 115, 48–80.

    Article  Google Scholar 

  • Halkos, G., & Bousinakis, D. (2010). The effect of stress and satisfaction on productivity. International Journal of Productivity and Performance Management, 59(5), 415–431.

    Article  Google Scholar 

  • Hamermesh, D. S. (1977). Economic aspects of job satisfaction. In O. Ashenfelter, & W. E. Oastes (Eds.), Essays in labour market analysis (pp. 53–72). New York: Wiley.

    Google Scholar 

  • Hudson, E., & Barrett, A. (2013). Peer groups, employment status and mental well-being among older adults in Ireland. IZA DP no. 7586.

  • Inglehart, R., & Klingemann, H. D. (2000). Genes, culture and happiness. Cambridge, MA: MIT Press.

    Google Scholar 

  • Instituto Nacional de Estadística (2013). Encuesta de Población Activa. http://www.ine.es/jaxiT3/Tabla.htm?t=4247.

  • Kahneman, D., Diener, E., & Schwarz, N. (1999). Well-being: The foundations of hedonic psychology. New York: Russell Sage Foundation.

    Google Scholar 

  • Kahneman, D., & Krueger, A. B. (2006). Developments in the measurement of subjective well-being. Journal of Economic Perspectives, 20(1), 3–24.

    Article  Google Scholar 

  • Kaiser, L. (2005). Gender-job satisfaction differences across Europe: An indicator for labor market modernization. IZA DP no. 1876.

  • Kawaguchi, D., Lee, J., & Hamermesh, D. S. (2012). A gift of time. IZA DP no. 6700.

  • Lechner, M. (2002). Program heterogeneity and propensity score matching: An application to the evaluation of active labor market policies. Review of Economics and Statistics, 84, 205–220.

    Article  Google Scholar 

  • Luechinger, S., Meier, S., & Stutzer, A. (2010). Why does unemployment hurt the employed? Evidence from the life satisfaction gap between the public and the private sector. Journal of Human Resources, 45(4), 998–1045.

    Article  Google Scholar 

  • Luttmer, E. (2005). Neighbors as negatives: Relative earnings and well-being. The Quarterly Journal of Economics, 120(3), 963–1002.

    Google Scholar 

  • Mangione, T. W., & Quinn, R. P. (1975). Job satisfaction, counter-productive behaviour and drug use at work. Journal of Applied Psychology, 60, 114–116.

    Article  Google Scholar 

  • Moulton, B. R. (1990). An illustration of a pitfall in estimating the effects of aggregate variables on micro units. Review of Economics and Statistics, 72(2), 334–338.

    Article  Google Scholar 

  • Neumayer, E. (2004). Recessions lower (some) mortality rates: Evidence from Germany. Social Science and Medicine, 58, 1037–1047.

    Article  Google Scholar 

  • OECD. (2014). Labour force statistics. http://stats.oecd.org/.

  • Oesch, D., & Lipps, O. (2012). Does unemployment hurt less if there is more of it around? A panel analysis of life satisfaction in Germany and Switzerland. European Sociological Review, 10, 1–13.

    Google Scholar 

  • Origo, F., & Pagani, L. (2009). Flexicurity and job satisfaction in Europe: The importance of perceived and actual job stability for well-being at work. Labour Economics, 16(5), 547–555.

    Article  Google Scholar 

  • Oswald, A. J. (1997). Happiness and economic performance. The Economic Journal, 107, 1815–1831.

    Article  Google Scholar 

  • Phelps, E. S., & Zoega, G. (2013). Corporatism and job satisfaction. Journal of Comparative Economics, 41(1), 35–47.

    Article  Google Scholar 

  • Powdthavee, N. (2007). Are there geographical variations in the psychological cost of unemployment in South Africa. Social Indicators Research, 80, 629–652.

    Article  Google Scholar 

  • Pugno, M., & Depredi, S. (2009). Job performance and job satisfaction: An integrated survey. Università Degli Studi Di Trento, Dipartimento di Economia, Discussion paper no. 4.

  • Rubin, D. B., & Thomas, N. (2000). Combining propensity score matching with additional adjustments for prognostic covariates. Journal of the American Statistical Association, 95, 573–585.

    Article  Google Scholar 

  • Ruhm, C. J. (2005). Healthy living in hard times. Journal of Health Economics, 24, 341–363.

    Article  Google Scholar 

  • Schwarz, P. (2012). Neighborhood effects of high unemployment rates: Welfare implications among different social groups. The Journal of Socio Economics, 41, 180–188.

    Article  Google Scholar 

  • Solnick, S. J., & Hemenway, D. (2005). Are positional concerns stronger in some domains than in others. American Economic Review, 95(2), 147–151.

    Article  Google Scholar 

  • Stuart, E. A., & Rubin, D. B. (2008). Best practices in quasi-experimental designs: Matching methods for causal inference. In J. W. Osborne (Ed.), Best practices in quantitative methods (pp. 155–176). Thousand Oaks, CA: Sage Publications.

    Chapter  Google Scholar 

  • Tapia-Granados, J. A. (2005). Recessions and mortality in Spain, 1980–1997. European Journal of Population, 21, 393–422.

    Article  Google Scholar 

  • Theodossiou, I., & Vasileiou, E. (2007). Making the risk of job loss a way of life: Does it affect job satisfaction? Research in Economics, 61, 71–83.

    Article  Google Scholar 

  • Van praag, B. M. S., & Ferrer-i-Carbonell, A. (2006). An almost integration-free approach to ordered response models. Tinbergen Institute discussion papers 06-047/3, Tinbergen Institute.

  • Winkelmann, L., & Winkelmann, R. (1998). Why are the unemployed so unhappy? Evidence from panel data. Economica, 65, 1–15.

    Article  Google Scholar 

  • Wolfers, J. (2003). Is business cycle volatility costly? Evidence from surveys of subjective well-being. International Finance, 6(1), 1–26.

    Article  Google Scholar 

Download references

Acknowledgments

We are grateful to Ana Ferrer-i-Carbonell and two anonymous referees for their comments and suggestions to an earlier draft.

Author information

Authors and Affiliations

  1. Facultad de Ciencias Económicas y Empresariales, University of Seville, Ramón y Cajal 1, 41018, Seville, Spain

    Cristina Borra & Francisco Gómez-García

Authors
  1. Cristina Borra
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Francisco Gómez-García
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Cristina Borra.

Appendix

Appendix

See Tables 7, 8, 9, 10, 11 and 12.

Table 7 Regional unemployment rates
Full size table
Table 8 Definition of control variables
Full size table
Table 9 All estimated coefficients in Table 2
Full size table
Table 10 Alternative measures of regional unemployment
Full size table
Table 11 The effect of regional unemployment rates on subjective wellbeing at work by gender, controlling for sample selection
Full size table
Table 12 Linear spline estimates of the effect of regional unemployment on subjective wellbeing at work (2006–2010)
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Borra, C., Gómez-García, F. Wellbeing at Work and the Great Recession: The Effect of Others’ Unemployment. J Happiness Stud 17, 1939–1962 (2016). https://doi.org/10.1007/s10902-015-9679-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10902-015-9679-8

Keywords

JEL Classification

Search

Navigation