Is utility related to employment status? Employment, unemployment, labor market policies and subjective well-being among Swedish youth

• Published in: Labour economics Vol. 4; no. 2; pp. 125 - 147
• Main Author: Korpi, Tomas
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 1997; Elsevier
• Series: Labour Economics
• Subjects: 1981-1985; Arbeitspsychologie; Jugendarbeitslosigkeit; Junge Arbeitskräfte; Lebensqualität; Manpower programs; Non-random selection; Schweden; Subjective well-being; Unemployment; Unemployment benefits; Unobserved heterogeneity; Subjective well-being; Non-random selection; Manpower programs; Unemployment benefits; Unobserved heterogeneity; J65; J64; J68; Unemployment
• ISSN: 0927-5371; 1879-1034
• DOI: 10.1016/S0927-5371(97)00002-X

Inherent in wage bargaining models and in models of job search is the assumption that utility is related to employment status. It is thus postulated that unemployment is associated with lower utility than employment, or that unemployment is moderated by manpower programs and unemployment benefits. Yet despite the centrality of such assumptions, empirical evidence on these issues is rarely presented. This paper presents such evidence, analyzing differences in subjective well-being among youth relating to employment, unemployment, participation in manpower programs and receipt of unemployment benefits. The results show that, relative to employment, unemployment has an unambiguously negative effect on well-being. Manpower programs seem to occupy an intermediate position. They are clearly better than unemployment and there are suggestions that they are worse than employment.