Does well-being help you with unemployment?

Summary

This study examines the role of people’s subjective well-being in relation to one of the most important economic shocks – unemployment. It empirically investigates the impact of well-being on (i) unemployment propensity, (ii) maintaining employment and (iii) exiting from unemployment. We find that being more satisfied with life and having better mental health in the previous wave predict a lower probability of being currently unemployed. We further show that life satisfaction and mental health may matter significantly for maintaining employment. These effects are qualitatively similar across genders and ethnic groups of the respondents. The current paper thus provides new empirical evidence on the link between well-being and job loss by highlighting the importance of having high levels of well-being.