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Austerity plan announcements and the impact on the employees’ wellbeing

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  • Botezat, Alina

Abstract

This study investigates the impact of austerity plan announcements on employees’ wellbeing. We exploit the unexpected announcement of a drastic wage cut (25%) related to public sector employees in Romania. Using data from the Eurobarometer Surveys and the European Quality of Life Survey, we employ a difference-in-difference research design combined with matching, based on entropy balancing, to identify the causal effects. Our results reveal that the mere announcement of austerity measures leads to an overall drop in life satisfaction among those working in the public sector. We also show that men, and especially married individuals, are most affected by the substantial wage cut announcement. Contrary to previous research, we find that public sector employees with higher levels of education are more likely to be affected by this policy communication compared to those with only secondary or primary levels of education. Our results also suggest that the negative effect of the announcement is not persisting over time.

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  • Botezat, Alina, 2017. "Austerity plan announcements and the impact on the employees’ wellbeing," Journal of Economic Psychology, Elsevier, vol. 63(C), pages 1-16.
    • Handle: RePEc:eee:joepsy:v:63:y:2017:i:c:p:1-16
    DOI: 10.1016/j.joep.2017.09.002
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    2. Alina BOTEZAT & Andreea MORARU, 2020. "Brain drain from Romania: what do we know so far about the Romanian medical diaspora? Abstract: In recent years a considerable amount of attention has been directed to the migration of tertiary educat," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 309-334, June.

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    More about this item

    Keywords

    Austerity measures; National announcement; Public sector; Social perception; Romania; Wellbeing;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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