Empirical Economics

, Volume 46, Issue 3, pp 1111–1141 | Cite as

Regional unemployment and norm-induced effects on life satisfaction

Article

Abstract

While rising unemployment generally reduces people’s happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study rejects this thesis for German panel data, however, and finds that individual unemployment is even more hurtful when regional unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one’s own living is lower. A comprehensive discussion reconciles these findings with the existing research and concludes that to find evidence for the often described social-norm effect it is worthwhile to analyse disutility associated with benefit receipts.

Keywords

Social norms Regional unemployment Individual unemployment Well-being Social benefits Labour market policies 

JEL Classification

I3 J6 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.The Institute for Labour Law and Industrial Relations in the European Union/IAAEU University of TrierTrierGermany

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