PT  - JOURNAL ARTICLE
AU  - Simon Luechinger
AU  - Stephan Meier
AU  - Alois Stutzer
TI  - Why Does Unemployment Hurt the Employed?
AID  - 10.3368/jhr.45.4.998
DP  - 2010 Oct 02
TA  - Journal of Human Resources
PG  - 998--1045
VI  - 45
IP  - 4
4099  - http://jhr.uwpress.org/content/45/4/998.short
4100  - http://jhr.uwpress.org/content/45/4/998.full
SO  - J Hum Resour2010 Oct 02; 45
AB  - 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’.