The Effect of Employment Status on Life Satisfaction in Europe

Abstract

There has been a growing interest in the concept of happiness in economics, psychology, and sociology. The effect of employment status on life satisfaction has been of particular interest in the empirical research of economics. A substantial body of literature shows that unemployment is associated with lower levels of happiness conceptualized as life satisfaction. This paper investigates life satisfaction levels in three dimensions of life-social and demographic characteristics, social inequality, and employment-using the third wave of the European Quality of Life Survey (EQLS) conducted in 2011. Multiple regression results are consistent with that of previous literature. Even when the financial situation and other individual characteristics are held constant, unemployment reduces people's life satisfaction. The final model shows that the impact of social exclusion, deprivation, and financial differences on life satisfaction proves to be higher than the impacts of education level, marital status, age, and employment status. Hence, welfare state policies affecting social inequalities and labor market have significant effects on life satisfaction.