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Welfare to work and work to welfare: the effect of the reference point — a theoretical and experimental study
Economics Letters 105 (2009) 290–292
Contents lists available at ScienceDirect
Economics Letters j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o l e t
Welfare to work and work to welfare: the effect of the reference point — a theoretical and experimental study Arie Sherman a, Tal Shavit b,⁎ a b
The Department of Economics, Ben-Gurion University of the Negev, Israel The School of Business Administration, The College of Management, 7 Rabin Ave., Rishon-Le'Zion, Israel
a r t i c l e
i n f o
Article history: Received 6 April 2008 Received in revised form 13 August 2009 Accepted 27 August 2009 Available online 4 September 2009
a b s t r a c t This paper shows theoretically (based on loss aversion) and experimentally that the replacement rate between allowance and salary is above one when moving from work to welfare. When moving from welfare to work the replacement rate is lower than one. © 2009 Elsevier B.V. All rights reserved.
Keywords: Welfare Work Reference point Experiment Loss aversion Replacement rate JEL classification: C91 D60 E24
1. Introduction The standard leisure–consumption model is widely used to analyze welfare incentives, particularly the decision to participate in a welfare program (e.g, Moffitt, 2002; Grogger and Karoly, 2005). According to this model, rational consumers maximize utility under budget constraints, while preferences for leisure and consumption do not change according to position in the labor market. The standard outcome is that a decision to remain on welfare and a decision to leave the work force and participate in a welfare program are equivalent decisions for any given replacement rate (RR).1 In this paper we argue that the decision to participate in a welfare program depends on an individual's reference point. That is, if an individual is unemployed and already receiving welfare benefits, he or she will likely choose to stay on welfare, while an individual who is
⁎ Corresponding author. Tel.: +972 52 2920868; fax: +972 3 6742796. E-mail address: [email protected] (T. Shavit). 1
The ratio of unemployment benefit to income from employment.
0165-1765/$ – see front matter © 2009 Elsevier B.V. All rights reserved. doi:10.1016/j.econlet.2009.08.020
already employed will likely choose to work for the same replacement rate rather than go on welfare. We present a descriptive model that combines the “objectivist” approach and loss aversion. According to the loss aversion view (Kahneman and Tversky, 1991), the subjective loss deriving from changing one's position from worker to welfare recipient is larger than the subjective gain deriving from changing one's position from welfare recipient to worker. We establish the notion of non-pecuniary loss based upon a vast body of psychological and economic literature indicating that “becoming unemployed is one of the worst experiences a person can have” (Layard et al., 2005: xxxix)2. The gain derived from working is established based on the findings of Van Praag and Carbonell (2002). These findings derive from the determination of the German SocioEconomic Panel that the average psychological benefit derived from working constitutes about 46% of the monetary income. We demonstrate our argument using an experimental procedure that presents allegedly irrational behavior. For a replacement rate
2 Feather (1990) provides a summary of psychological literature. For empirical findings see Clark and Oswald (1994); Korpi (1997); Winkelmann and Winkelmann (1988); Clark et al., (2001); Clark (2006).
A. Sherman, T. Shavit / Economics Letters 105 (2009) 290–292
291
The minimum income from work required by the individual to move from welfare to work is an amount that would leave the individual with the same utility as in the welfare program, as follows:
Table 1 Position and income subgroups. Group
Participants
Employment status (full-time vs. half-time)
Income
A B C D
36 40 38 40
Full Full Half Half
5000N.I.S 2500N.I.S 5000N.I.S 2500N.I.S
I = B+
β⋅ðLB −LI Þ W2 : − α α
ð2Þ
2.2. Moving from work to welfare higher than one, the average individual will prefer to keep working rather than becoming unemployed and receiving a government allowance. On the other hand, the same average individual will chose to stay unemployed and keep his government allowance for a replacement rate equal to 0.7. The paper is organized as follows. Section 2 presents the descriptive model. Section 3 describes the experimental procedure, Section 4 presents the results, and Section 5 concludes.
When an individual moves from work to welfare, he takes into consideration the change in his utility due to change in income, change in leisure and the loss involved in moving from work to welfare. The minimum welfare benefit required by an individual to move from work to welfare is the welfare benefit that would leave the individual with the same utility received from working, as follows: B = I+
2. Descriptive model Let us assume U(·) describes the utility of the individual, which is a function of the following observable factors: (I) B — welfare program benefits. (II) I — income from employment. (III) L — leisure. Another factor that should be taken into consideration is the nonpecuniary gains/costs of moving from welfare to work and from work to welfare. Based on loss aversion, the disutility of unemployment and the positive utility of working, the gains and costs are described as follows: (I) W1 is the cost of moving from work to welfare. (II) W2 is the gain of moving from welfare to work.
β⋅ðLI −LB Þ W + 1: α α
ð3Þ
The difference between income and welfare benefits in the case of β⋅ðLB −LI Þ w2 moving from welfare to work is: I – B = − , where the α α B ratio represents the minimum replacement rate required by the I individual in order to remain unemployed. On the other hand, if the individual is already employed the difference between income and β⋅ðLB −LI Þ w1 B − , where the ratio represents welfare benefit is: I – B = α α I the minimum replacement rate required by the individual to become unemployed. In the case of loss aversion (W1 > W2), the model predicts that the minimum replacement rate required to remain on welfare is lower than the minimum replacement rate required to go from being employed to being a welfare recipient. 3. The experimental procedure
According to loss aversion, the subjective loss deriving from changing position from work to welfare is greater than the subjective gain deriving from changing position from welfare to work: W1 > W2. To simplify, we use a linear utility as follows: UðÞ = UðB; L; IÞ = α ðB + IÞ + β L
ð1Þ
where α is the marginal utility from income, and β is the marginal utility from leisure. 2.1. Moving from welfare to work Let us consider an initial state of an unemployed worker who is participating in a welfare program. In this state, the income from work is zero and the leisure is LB. However, if this individual chooses to give up the welfare program and start working, his income from work is I (B = 0) and the leisure is LI.
154 students of economics from Achva College, Ben-Gurion University and the Open University of Israel were asked to complete a questionnaire about their preferences regarding being employed and receiving welfare (56% were men, 46% were women, and the average age was 25). The questionnaire was completed in class and lasted approximately 15 min. The participants were divided into four groups, as shown in Table 1. The participants in each group were asked to indicate the minimum income they would be willing to accept to move from being on welfare to being employed. For each group, income from welfare and employment status (full-time or half-time), were according to Table 1. Participants had to confront three basic states: (1) The basic state, with no restrictions. (2) A state of temporary work. (3) The stigma of their name appearing on a list of welfare recipients.
Table 2 Average salary in place of allowance (and RR) and allowance in place of salary (and RR) for full-time position (STDV in brackets). Allowance/salary: Status:
5000N.I.S Full
Directions of transition
Welfare to work
Requested Income
Salary
RR
Allowance
RR
Salary
RR
Allowance
RR
Basic state Temporary position Stigma
9272 (3813) 11,663 (5447) 8064 (3213)
0.62a (0.23) 0.54a (0.19) 0.70a (0.25)
4833 (1,522) 6860 (2,145) 5,318 (1,627)
0.97 (0.3) 1.37a (0.43) 1.06 (0.33)
5966 (2814) 7171 (3780) 5648 (2628)
0.49a (0.18) 0.43a (0.18) 0.51a (0.19)
3569 (3810) 4226 (2584) 3907 (2872)
1.43a (1.52) 1.69a (1.03) 1.56a (1.15)
a
2500N.I.S Full Work to welfare
T-test significance < 0.05 for the null hypothesis that the rate is not different from 1.
Welfare to work
Work to welfare
292
A. Sherman, T. Shavit / Economics Letters 105 (2009) 290–292
Table 3 Average salary in place of allowance (and RR) and allowance in place of salary (and RR) for half-time position (STDV in brackets). Allowance/Salary: Status:
5000N.I.S Half
Directions of transition
Welfare to work
Requested Income
Salary
RR
Allowance
RR
Salary
RR
Allowance
RR
Basic state Temporary position Stigma
7053 (1497) 9069 (2651) 6250 (1584)
0.74a(0.16) 0.60a (0.19) 0.86a (0.27)
5026 (1335) 7496 (2832) 6027 (3016)
1.01 (0.27) 1.5a (0.57) 1.21a (0.6)
4433 (1415) 5405 (1727) 4264 (1259)
0.62a (0.19) 0.51a (0.15) 0.64a (0.18)
3000 (1070) 4221 (1814) 3126 (1277)
1.2a (0.43) 1.69a (0.73) 1.25a (0.51)
a
2500N.I.S Half Work to welfare
Welfare to work
Work to welfare
T-test significance < 0.05 for the null hypothesis that the rate is not different from 1.
Participants were also asked to indicate the minimum income they would be willing to accept in order to move from work to welfare. Again for each group, income received from work and employment status (full-time or half-time), were according to Table 1. Subjects had to confront three basic states, corresponding with the states of moving from welfare to work, as follows: (1) The basic state with no restrictions. (2) A state of being temporarily on welfare. (3) The stigma of their name appearing on a list of welfare recipients. The questions were presented in random order to prevent an order effect.
to being on welfare. This asymmetry does not imply irrational behavior. Rather, it is another manifestation of the asymmetry of value referred to by Kahneman and Tversky (1991) as loss aversion. The main implication of this finding for welfare policy is that work should be emphasized as an effective tool for decreasing the number of welfare recipients. Once an individual has moved from welfare to work, he is less likely to go back on welfare if he continues to work. This paper introduces an unorthodox explanation for this phenomenon: the disincentive to work as measured by the replacement rate has a weaker effect when the individual is employed. This initial study theoretically and experimentally explores the effect of loss aversion on the decision to move from work to welfare. Future work should extend our argument to macro models of general equilibrium (e.g., Boone and van Qurs (2006)).
4. Results In Tables 2 and 3 we present the average minimum salary participants requested in order to move from welfare to work and the average required allowance when participants are asked to give up a salaried position and move to welfare allowance. For each directions of transition we also present the average replacement rate (RR). Table 2 presents the data for the full position groups and Table 3 presents the data for the half position groups. For the move from welfare to work, in all the scenarios, the RR is significantly less than 1 (T-test significance < 0.05). The average RR is 0.6, indicating that the allowance for unemployed is 60% of the minimum salary required to move to employment. For the move from work to welfare, RR is greater than 1 (T-test significance < 0.05) or does not differ from 1. The average RR is 1.33 indicating that when moving from work to welfare, individuals on average ask for higher welfare allowances (in 33%) than the income they receive from work. When comparing the RR of the two directions of transition we get that RR is higher for the move from work to welfare than for the move from welfare to work in all the cases (T-test significance < 0.05). As the model predicts, the minimum RR requested by the average subject in order to become unemployed is higher than the minimum RR requested by the same subject in order to remain unemployed. 5. Conclusions This paper has argued that an individual's decision to remain on welfare is not symmetric to the decision to move from being employed
References Boone, J., Van Qurs, J., 2006. Modeling financial incentives to get the unemployed back to work. Journal of Institutional and Theoretical Economics 162, 227–252. Clark, A.E, 2006. A note on unhappiness and unemployment duration. IZA discussion paper, p. 2406. Clark, A.E., Oswald, A.J., 1994. Unhappiness and unemployment. Economic Journal 104, 648–659. Clark, A.E., Georgellis, Y., Sanfey, P., 2001. Scarring: the psychological impact of past unemployment. Economica 68, 221–241. Feather, N., 1990. The Psychological Impact of Unemployment. Springer, New York. Grogger, J., Karoly, L., 2005. Welfare Reform: Effects of a Decade of Change. Harvard University Press, Cambridge, MA. Kahneman, D., Tversky, A., 1991. Loss aversion in risk less choice: a reference — dependent model. Quarterly Journal of Economics 65, 1039–1061. Korpi, T., 1997. Is utility related to employment status? Employment, unemployment, labor market policies and subjective well-being among Swedish youth. Labour Economics 4, 125–147. Layard, R., Nickell, S., Jackman, R., 2005. Unemployment: Macroeconomic Performance and the Labor Market. University Press, Oxford. Moffitt, R., 2002. Welfare programs and labor supply. In: Auerbach, A., Feldstein, M. (Eds.), Handbook of Public Economics, vol. 4. North Holland, Amsterdam. Van Praag, B.M.S., Carbonell, A.F., 2002. Life satisfaction differences between workers and non-workers — the value of participation per se. Tinbergen Institute discussion paper 018/3. Winkelmann, L., Winkelmann, R., 1988. Why are the unemployed so unhappy? Evidence from panel data. Economica 65, 1–15.
Contents lists available at ScienceDirect
Economics Letters j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o l e t
Welfare to work and work to welfare: the effect of the reference point — a theoretical and experimental study Arie Sherman a, Tal Shavit b,⁎ a b
The Department of Economics, Ben-Gurion University of the Negev, Israel The School of Business Administration, The College of Management, 7 Rabin Ave., Rishon-Le'Zion, Israel
a r t i c l e
i n f o
Article history: Received 6 April 2008 Received in revised form 13 August 2009 Accepted 27 August 2009 Available online 4 September 2009
a b s t r a c t This paper shows theoretically (based on loss aversion) and experimentally that the replacement rate between allowance and salary is above one when moving from work to welfare. When moving from welfare to work the replacement rate is lower than one. © 2009 Elsevier B.V. All rights reserved.
Keywords: Welfare Work Reference point Experiment Loss aversion Replacement rate JEL classification: C91 D60 E24
1. Introduction The standard leisure–consumption model is widely used to analyze welfare incentives, particularly the decision to participate in a welfare program (e.g, Moffitt, 2002; Grogger and Karoly, 2005). According to this model, rational consumers maximize utility under budget constraints, while preferences for leisure and consumption do not change according to position in the labor market. The standard outcome is that a decision to remain on welfare and a decision to leave the work force and participate in a welfare program are equivalent decisions for any given replacement rate (RR).1 In this paper we argue that the decision to participate in a welfare program depends on an individual's reference point. That is, if an individual is unemployed and already receiving welfare benefits, he or she will likely choose to stay on welfare, while an individual who is
⁎ Corresponding author. Tel.: +972 52 2920868; fax: +972 3 6742796. E-mail address: [email protected] (T. Shavit). 1
The ratio of unemployment benefit to income from employment.
0165-1765/$ – see front matter © 2009 Elsevier B.V. All rights reserved. doi:10.1016/j.econlet.2009.08.020
already employed will likely choose to work for the same replacement rate rather than go on welfare. We present a descriptive model that combines the “objectivist” approach and loss aversion. According to the loss aversion view (Kahneman and Tversky, 1991), the subjective loss deriving from changing one's position from worker to welfare recipient is larger than the subjective gain deriving from changing one's position from welfare recipient to worker. We establish the notion of non-pecuniary loss based upon a vast body of psychological and economic literature indicating that “becoming unemployed is one of the worst experiences a person can have” (Layard et al., 2005: xxxix)2. The gain derived from working is established based on the findings of Van Praag and Carbonell (2002). These findings derive from the determination of the German SocioEconomic Panel that the average psychological benefit derived from working constitutes about 46% of the monetary income. We demonstrate our argument using an experimental procedure that presents allegedly irrational behavior. For a replacement rate
2 Feather (1990) provides a summary of psychological literature. For empirical findings see Clark and Oswald (1994); Korpi (1997); Winkelmann and Winkelmann (1988); Clark et al., (2001); Clark (2006).
A. Sherman, T. Shavit / Economics Letters 105 (2009) 290–292
291
The minimum income from work required by the individual to move from welfare to work is an amount that would leave the individual with the same utility as in the welfare program, as follows:
Table 1 Position and income subgroups. Group
Participants
Employment status (full-time vs. half-time)
Income
A B C D
36 40 38 40
Full Full Half Half
5000N.I.S 2500N.I.S 5000N.I.S 2500N.I.S
I = B+
β⋅ðLB −LI Þ W2 : − α α
ð2Þ
2.2. Moving from work to welfare higher than one, the average individual will prefer to keep working rather than becoming unemployed and receiving a government allowance. On the other hand, the same average individual will chose to stay unemployed and keep his government allowance for a replacement rate equal to 0.7. The paper is organized as follows. Section 2 presents the descriptive model. Section 3 describes the experimental procedure, Section 4 presents the results, and Section 5 concludes.
When an individual moves from work to welfare, he takes into consideration the change in his utility due to change in income, change in leisure and the loss involved in moving from work to welfare. The minimum welfare benefit required by an individual to move from work to welfare is the welfare benefit that would leave the individual with the same utility received from working, as follows: B = I+
2. Descriptive model Let us assume U(·) describes the utility of the individual, which is a function of the following observable factors: (I) B — welfare program benefits. (II) I — income from employment. (III) L — leisure. Another factor that should be taken into consideration is the nonpecuniary gains/costs of moving from welfare to work and from work to welfare. Based on loss aversion, the disutility of unemployment and the positive utility of working, the gains and costs are described as follows: (I) W1 is the cost of moving from work to welfare. (II) W2 is the gain of moving from welfare to work.
β⋅ðLI −LB Þ W + 1: α α
ð3Þ
The difference between income and welfare benefits in the case of β⋅ðLB −LI Þ w2 moving from welfare to work is: I – B = − , where the α α B ratio represents the minimum replacement rate required by the I individual in order to remain unemployed. On the other hand, if the individual is already employed the difference between income and β⋅ðLB −LI Þ w1 B − , where the ratio represents welfare benefit is: I – B = α α I the minimum replacement rate required by the individual to become unemployed. In the case of loss aversion (W1 > W2), the model predicts that the minimum replacement rate required to remain on welfare is lower than the minimum replacement rate required to go from being employed to being a welfare recipient. 3. The experimental procedure
According to loss aversion, the subjective loss deriving from changing position from work to welfare is greater than the subjective gain deriving from changing position from welfare to work: W1 > W2. To simplify, we use a linear utility as follows: UðÞ = UðB; L; IÞ = α ðB + IÞ + β L
ð1Þ
where α is the marginal utility from income, and β is the marginal utility from leisure. 2.1. Moving from welfare to work Let us consider an initial state of an unemployed worker who is participating in a welfare program. In this state, the income from work is zero and the leisure is LB. However, if this individual chooses to give up the welfare program and start working, his income from work is I (B = 0) and the leisure is LI.
154 students of economics from Achva College, Ben-Gurion University and the Open University of Israel were asked to complete a questionnaire about their preferences regarding being employed and receiving welfare (56% were men, 46% were women, and the average age was 25). The questionnaire was completed in class and lasted approximately 15 min. The participants were divided into four groups, as shown in Table 1. The participants in each group were asked to indicate the minimum income they would be willing to accept to move from being on welfare to being employed. For each group, income from welfare and employment status (full-time or half-time), were according to Table 1. Participants had to confront three basic states: (1) The basic state, with no restrictions. (2) A state of temporary work. (3) The stigma of their name appearing on a list of welfare recipients.
Table 2 Average salary in place of allowance (and RR) and allowance in place of salary (and RR) for full-time position (STDV in brackets). Allowance/salary: Status:
5000N.I.S Full
Directions of transition
Welfare to work
Requested Income
Salary
RR
Allowance
RR
Salary
RR
Allowance
RR
Basic state Temporary position Stigma
9272 (3813) 11,663 (5447) 8064 (3213)
0.62a (0.23) 0.54a (0.19) 0.70a (0.25)
4833 (1,522) 6860 (2,145) 5,318 (1,627)
0.97 (0.3) 1.37a (0.43) 1.06 (0.33)
5966 (2814) 7171 (3780) 5648 (2628)
0.49a (0.18) 0.43a (0.18) 0.51a (0.19)
3569 (3810) 4226 (2584) 3907 (2872)
1.43a (1.52) 1.69a (1.03) 1.56a (1.15)
a
2500N.I.S Full Work to welfare
T-test significance < 0.05 for the null hypothesis that the rate is not different from 1.
Welfare to work
Work to welfare
292
A. Sherman, T. Shavit / Economics Letters 105 (2009) 290–292
Table 3 Average salary in place of allowance (and RR) and allowance in place of salary (and RR) for half-time position (STDV in brackets). Allowance/Salary: Status:
5000N.I.S Half
Directions of transition
Welfare to work
Requested Income
Salary
RR
Allowance
RR
Salary
RR
Allowance
RR
Basic state Temporary position Stigma
7053 (1497) 9069 (2651) 6250 (1584)
0.74a(0.16) 0.60a (0.19) 0.86a (0.27)
5026 (1335) 7496 (2832) 6027 (3016)
1.01 (0.27) 1.5a (0.57) 1.21a (0.6)
4433 (1415) 5405 (1727) 4264 (1259)
0.62a (0.19) 0.51a (0.15) 0.64a (0.18)
3000 (1070) 4221 (1814) 3126 (1277)
1.2a (0.43) 1.69a (0.73) 1.25a (0.51)
a
2500N.I.S Half Work to welfare
Welfare to work
Work to welfare
T-test significance < 0.05 for the null hypothesis that the rate is not different from 1.
Participants were also asked to indicate the minimum income they would be willing to accept in order to move from work to welfare. Again for each group, income received from work and employment status (full-time or half-time), were according to Table 1. Subjects had to confront three basic states, corresponding with the states of moving from welfare to work, as follows: (1) The basic state with no restrictions. (2) A state of being temporarily on welfare. (3) The stigma of their name appearing on a list of welfare recipients. The questions were presented in random order to prevent an order effect.
to being on welfare. This asymmetry does not imply irrational behavior. Rather, it is another manifestation of the asymmetry of value referred to by Kahneman and Tversky (1991) as loss aversion. The main implication of this finding for welfare policy is that work should be emphasized as an effective tool for decreasing the number of welfare recipients. Once an individual has moved from welfare to work, he is less likely to go back on welfare if he continues to work. This paper introduces an unorthodox explanation for this phenomenon: the disincentive to work as measured by the replacement rate has a weaker effect when the individual is employed. This initial study theoretically and experimentally explores the effect of loss aversion on the decision to move from work to welfare. Future work should extend our argument to macro models of general equilibrium (e.g., Boone and van Qurs (2006)).
4. Results In Tables 2 and 3 we present the average minimum salary participants requested in order to move from welfare to work and the average required allowance when participants are asked to give up a salaried position and move to welfare allowance. For each directions of transition we also present the average replacement rate (RR). Table 2 presents the data for the full position groups and Table 3 presents the data for the half position groups. For the move from welfare to work, in all the scenarios, the RR is significantly less than 1 (T-test significance < 0.05). The average RR is 0.6, indicating that the allowance for unemployed is 60% of the minimum salary required to move to employment. For the move from work to welfare, RR is greater than 1 (T-test significance < 0.05) or does not differ from 1. The average RR is 1.33 indicating that when moving from work to welfare, individuals on average ask for higher welfare allowances (in 33%) than the income they receive from work. When comparing the RR of the two directions of transition we get that RR is higher for the move from work to welfare than for the move from welfare to work in all the cases (T-test significance < 0.05). As the model predicts, the minimum RR requested by the average subject in order to become unemployed is higher than the minimum RR requested by the same subject in order to remain unemployed. 5. Conclusions This paper has argued that an individual's decision to remain on welfare is not symmetric to the decision to move from being employed
References Boone, J., Van Qurs, J., 2006. Modeling financial incentives to get the unemployed back to work. Journal of Institutional and Theoretical Economics 162, 227–252. Clark, A.E, 2006. A note on unhappiness and unemployment duration. IZA discussion paper, p. 2406. Clark, A.E., Oswald, A.J., 1994. Unhappiness and unemployment. Economic Journal 104, 648–659. Clark, A.E., Georgellis, Y., Sanfey, P., 2001. Scarring: the psychological impact of past unemployment. Economica 68, 221–241. Feather, N., 1990. The Psychological Impact of Unemployment. Springer, New York. Grogger, J., Karoly, L., 2005. Welfare Reform: Effects of a Decade of Change. Harvard University Press, Cambridge, MA. Kahneman, D., Tversky, A., 1991. Loss aversion in risk less choice: a reference — dependent model. Quarterly Journal of Economics 65, 1039–1061. Korpi, T., 1997. Is utility related to employment status? Employment, unemployment, labor market policies and subjective well-being among Swedish youth. Labour Economics 4, 125–147. Layard, R., Nickell, S., Jackman, R., 2005. Unemployment: Macroeconomic Performance and the Labor Market. University Press, Oxford. Moffitt, R., 2002. Welfare programs and labor supply. In: Auerbach, A., Feldstein, M. (Eds.), Handbook of Public Economics, vol. 4. North Holland, Amsterdam. Van Praag, B.M.S., Carbonell, A.F., 2002. Life satisfaction differences between workers and non-workers — the value of participation per se. Tinbergen Institute discussion paper 018/3. Winkelmann, L., Winkelmann, R., 1988. Why are the unemployed so unhappy? Evidence from panel data. Economica 65, 1–15.