The unhappily unemployed return to work faster

Abstract

This paper shows that job loss is associated with a fall in subjective well-being (SWB). It then looks at how this change in SWB predicts job search and unemployment duration. The findings suggest that those who report feeling hurt by unemployment have shorter unemployment durations. Men who report a loss of SWB are also more likely to look for a job, but women’s job search is not affected by the SWB loss. These findings confirm the theoretical prediction from job search theory: search effort and unemployment duration are affected by the utility differential between having a job and being unemployed. JEL codes: J64; J28