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Chadi, Adrian
Year of Publication: 
Series/Report no.: 
IAAEU Discussion Paper Series in Economics 06/2013
While rising unemployment generally reduces people's happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study rejects this thesis for German panel data, however, and finds that individual unemployment is even more hurtful when regional unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one's own living is lower. A comprehensive discussion reconciles these findings with the existing research and concludes that in order to find evidence for the often-described social-norm effect it is worthwhile to analyse disutility associated with benefit receipts.
social norms
regional unemployment
individual unemployment
social benefits
labour market policies
Document Type: 
Working Paper

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