Friday, March 25, 2011

Krueger and Muller: Unemployment and Wellbeing

Really important paper below by Krueger and Muller on unemployment and well-being. This type of research is vital to understand for those designing the new unemployment benefit and job assistance system in Ireland. It provides the most detailed account of how people actually feel and behave during the course of unemployment and offers the potential for the development of a humane, enabling and evidence-based unemployment policy.

Job Search, Emotional Well-Being and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data

This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and winter of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) we do not observe a rise in job search or job finding around the time Unemployment Insurance (UI) benefits expire; (3) unemployed workers express much dissatisfaction and unhappiness with their lives, and their unhappiness rises the longer they are unemployed; (4) the unemployed appear to be particular sad during episodes of job search, and they find job search more depressing over the course of unemployment; (5) in the Great Recession the exit rate from unemployment was low at all durations, and declined gradually over the spell of unemployment; and (6) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).

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