Abstract

High unemployment rates entail substantial costs to the working population in terms of reduced subjective well-being. This paper studies the importance of individual economic security, in particular job security, by exploiting sector-specific institutional differences in the exposure to economic shocks. Public servants have stricter dismissal protection and face a lower risk of their organization becoming bankrupt than private sector employees. The empirical results from individual panel data for Germany and repeated cross-sectional data for the United States and Europe show that private sector employees' subjective well-being reacts indeed much more sensitive to fluctuations in unemployment rates than public sector employees'.

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Additional Information

ISSN
1548-8004
Print ISSN
0022-166X
Pages
pp. 998-1045
Launched on MUSE
2012-04-04
Open Access
No
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