How Unemployment Affects Happiness
How Unemployment Affects Happiness
An absolute goal of economic policy is full employment, which is associated with prosperity. Unemployment entails costs because it wastes valuable manpower and undermines an economy’s real output. On the basis of these assumptions, there have been attempts to obtain quantitative estimates of the welfare cost of unemployment. However, approaches based on forgone income do not take into account the psychology of having no work. This chapter explores the impact of unemployment on happiness. After reviewing the literature, it considers the effects of psychological costs and social norms on happiness.
Keywords: happiness, unemployment, welfare, income, psychological costs, social norms, psychology
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