Receiving money and not having to work raises happiness

Abstract

The standard economic textbook is very clear about how to alleviate the burden of involuntary unemployment. If one fully compensates people who become unemployed for the associated income loss, they will not suffer from unemployment at all. In fact, they will become strictly better off. Full income compensation guarantees the same consumption opportunities as before job loss and staying jobless allows the unemployed to enjoy more leisure: receiving more money but not having to work thus raises their well-being.