Unhappiness and job finding rates

Anne Gielen 1, Jan Van Ours1
1IZA, Germany, 2Tilburg University, The Netherlands

It is well-known that many workers experience a large drop in life satisfaction when they become unemployed. In this paper we investigate how this drop in life satisfaction affects their job finding rate. Using GSOEP data we find that indeed both male and female unemployed who experienced a drop in life satisfaction find a job much quicker than those who do not experience a drop in life satisfaction. We also find that the post-unemployment wages are unrelated to the drop in life satisfaction suggesting that the higher job finding rate is achieved through higher search intensity and not through a reduction in reservation wages.

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