Heterogeneity in the relationship between unemployment and subjective well-being: a quantile approach

Summary

Unemployment has been robustly shown to strongly decrease subjective
well-being (or “happiness”). In the present paper, we use panel quantile
regression techniques in order to analyze to what extent the negative
impact of unemployment varies along the subjective well-­being
distribution. In our analysis of British Household Panel Survey data
(1996–2008) we find that, over the quantiles of our subjective
well-being variable, individuals with high well-­being suffer less from
becoming unemployed. A similar but stronger effect of unemployment is
found for a broad mental well-being variable (GHQ-12). For happy and
mentally stable individuals, it seems their higher well-being acts like a
safety net when they become unemployed. We explore these findings by
examining the heterogeneous unemployment effects over the quantiles of
satisfaction with various life domains.