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The (Non-) Effect of Unemployment Benefits: Variations in the Effect of Unemployment on Life-Satisfaction Between EU Countries

Abstract

A negative effect of unemployment on subjective well-being has been demonstrated in many studies casting substantial doubt about assumptions of decisions of individuals to choose unemployment voluntarily as the utility-maximising option. These studies have been extended to take into account national-level context factors which have been shown to moderate the relationship between unemployment and life-satisfaction. So far most studies focussed mainly on economic indicators, although demographic and cultural differences between countries also affect how unemployment is perceived. An important variable that is not included in the majority of proper multilevel studies is the extent of unemployment benefits. Traditional micro-economic approaches argue that more extensive provisions should reduce the cost of unemployment and therefore reduce the motivation to regain employment—reflected in a reduction of the negative impact of unemployment. This study investigates this claim by using European Values Study data from all European Union countries and Norway as well as harmonised macroeconomic statistics from Eurostat. It finds that the effect of unemployment on life-satisfaction is indeed moderated by economic and demographic national-level factors, but not by unemployment benefits. To what extent unemployment reduces life-satisfaction varies greatly between countries, but appears to not be influenced by the extent of state unemployment provisions.

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Notes

  1. 1.

    All computations were done using HLM 6.06.

  2. 2.

    The mean number of respondents that were included in the analysis was 860/country.

  3. 3.

    Please see the descriptives table for the operationalisation of the variables (Table 1).

  4. 4.

    The predictors included: sex, age, dummy: married, dummy: having children, subjective health, dummy: higher education, parental education, happiness, welfare reliance, employment status, achievement orientation, autonomy perception, generalised trust.

  5. 5.

    However, the author acknowledges that a holistic assessment of robustness is difficult considering the restricted number of aggregate-level cases and the consequential limitation in applying simultaneous aggregate controls.

  6. 6.

    As briefly mentioned earlier, these results also held for other specifications of welfare state provisions for the unemployed and just general estimates of social welfare payments overall.

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Correspondence to Jan Eichhorn.

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Eichhorn, J. The (Non-) Effect of Unemployment Benefits: Variations in the Effect of Unemployment on Life-Satisfaction Between EU Countries. Soc Indic Res 119, 389–404 (2014). https://doi.org/10.1007/s11205-013-0474-9

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Keywords

  • Life-satisfaction
  • Unemployment
  • Welfare state
  • Subjective well-being
  • Multilevel modelling