Original Article
Life Satisfaction and Noncognitive Skills: Effects on the Likelihood of Unemployment
Kelsey J. O'Connor,
Corresponding Author
Kelsey J. O'Connor
STATEC Research (National Institute of Statistics and Economic Studies), 14 Rue Erasme, L-1468, Luxembourg
Kelsey J. O'Connor: STATEC Research (National Institute of Statistics and Economic Studies), 14 Rue Erasme, L-1468 Luxembourg. email: kelsey.oconnor@statec.etat.lu. This paper follows and replaces a working paper entitled “Happier People Are Less Likely to be Unemployed: Evidence from Longitudinal Data in Germany” (O'Connor, USC-INET Research Paper No 17-17). I would like to thank Richard Easterlin for comments and his guidance as my former PhD advisor at the University of Southern California: two anonymous referees, Brian Finley, Robson Morgan, Jeffrey Nugent, Francesco Sarracino, John Strauss, and the participants at numerous seminars and conferences for helpful comments. I gratefully acknowledge the financial support of the University of Southern California, Observatoire de la Compétitivité, Ministère de l’Economie, DG Compétitivité, Luxembourg, and STATEC. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Views and opinions expressed in this article are those of the author and do not reflect those of the University of Southern California, STATEC, or funding partners.Search for more papers by this authorKelsey J. O'Connor,
Corresponding Author
Kelsey J. O'Connor
STATEC Research (National Institute of Statistics and Economic Studies), 14 Rue Erasme, L-1468, Luxembourg
Kelsey J. O'Connor: STATEC Research (National Institute of Statistics and Economic Studies), 14 Rue Erasme, L-1468 Luxembourg. email: kelsey.oconnor@statec.etat.lu. This paper follows and replaces a working paper entitled “Happier People Are Less Likely to be Unemployed: Evidence from Longitudinal Data in Germany” (O'Connor, USC-INET Research Paper No 17-17). I would like to thank Richard Easterlin for comments and his guidance as my former PhD advisor at the University of Southern California: two anonymous referees, Brian Finley, Robson Morgan, Jeffrey Nugent, Francesco Sarracino, John Strauss, and the participants at numerous seminars and conferences for helpful comments. I gratefully acknowledge the financial support of the University of Southern California, Observatoire de la Compétitivité, Ministère de l’Economie, DG Compétitivité, Luxembourg, and STATEC. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Views and opinions expressed in this article are those of the author and do not reflect those of the University of Southern California, STATEC, or funding partners.Search for more papers by this authorSUMMARY
Psychological measures are gaining recognition as important determinants of labor performance. This paper demonstrates that people reporting greater subjective well-being (SWB) are causally less likely to be unemployed in the future. The relation exhibits a meaningful magnitude relative to the mean unemployment rate and other determinants. The analysis is based on a longitudinal survey of German households over the period 1996-2013 (German Socio-Economic Panel). Analyses include separate dynamic and fixed-effects regressions, and two instrumental variable approaches. Together, this sample and set of analyses, makes it possible to assess the relation for previously unstudied groups and to assess different mechanisms. Indeed the relation exhibits considerable heterogeneity. It is quadratic and substantially greater for students and people that are presently unemployed (compared to their counterparts). Fixed effects regressions indicate that SWB affects future unemployment in part through within-person changes in the Big-Five personality traits (e.g., conscientiousness or emotional stability) but not cognitive ability. The results imply SWB may be used as a proxy for alternative psychological predictors of performance, which is important because SWB is more broadly available than many alternatives (e.g., the Big Five). What is more, policy makers have additional reasons to promote SWB.
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