PETRI BÖCKERMAN and PEKKA ILMAKUNNAS ELUSIVE EFFECTS OF UNEMPLOYMENT ON HAPPINESS

ABSTRACT. This paper explores the connection between unemployment and subjective well-being in Finland using cross-sections for the years 1990, 1996 and 2000 from World Values Surveys. Interestingly, an unprecedented increase in the national unemployment rate (from 3 to 17%) did not produce a drop in the mean level of subjective well-being. Personally experiencing unemployment reduces life satisfaction, but does not have a significant effect on happiness in ordered logit estimation. However, generalized ordered logit estimation reveals that being unemployed has a negative effect on happiness at lower happiness scores, but no significant effect at high happiness levels. KEY WORDS: happiness, unhappiness, life satisfaction, unemployment 1