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Subjective well-being and aggregate unemployment: further evidence



According to the literature, individual well-being is negatively related to aggregate unemployment. This study examines whether the distribution of aggregate unemployment by duration affects well-being, in addition to the level of unemployment. Different explanations are provided to indicate how the shares of short-term (up to 3 months) and long-term (more than 1 year) unemployed people could affect the well-being of the employed and unemployed. Using data from almost 300,000 individuals from 11 EU countries, we find significant effects of both shares on life satisfaction. Among the unemployed, for example, we find a U-shaped effect of the distribution of aggregate unemployment by duration on subjective well-being, which compensates to some extent for the negative effect of the unemployment rate.

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