October 2006

IZA DP No. 2406: A Note on Unhappiness and Unemployment Duration

published in Applied Economics Quarterly, 2006, 52 (4), 291-308

Although it is now widely-accepted that unemployment is associated with sharply lower levels of individual well-being, relatively little is known about how this effect depends on unemployment duration. Data from three large-scale European panels is used to shed light on this issue; these data allow us to distinguish habituation to unemployment from sample selection. The panel results show little evidence of habituation to unemployment in Europe in the 1990's.