Unemployment and Happiness

Are unemployed people unhappier than employed people? To answer this question, this paper presents an extensive review of previous overseas studies and conducts an empirical analysis of the determinants of happiness in Japan. The main result in this study is consistent with that of previous studies; even when the income level and other individual characteristics are held constant, unemployment reduces people’s happiness. This conclusion, if it is true, suggests that under budget constraints, to create jobs rather than to redistribute wealth to the unemployed may be more effective to raise people’s levels of subjective well-being (happiness).