NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

New measures of the costs of unemployment: Evidence from the subjective well-being of 3.3 million Americans

John F. Helliwell, Haifang Huang

NBER Working Paper No. 16829
Issued in February 2011
NBER Program(s):   EFG   LS   PE

Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.

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A data appendix is available at http://www.nber.org/data-appendix/w16829

This paper was revised on February 7, 2014

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Document Object Identifier (DOI): 10.3386/w16829

Forthcoming, Economic Inquiry.

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