Employment and Life-Satisfaction: Insights from Ireland

Mainstream neoclassical economics takes it as given that the consumption of goods and services (output) is positively related to well-being. Work (labour-input) is assumed to be negatively related to well-being at the margin and so is only undertaken in exchange for payment. This view has been challenged for decades in the psychology and sociology literature and results suggests that employment status (especially unemployment) has profound effects on well-being, even at the margin. It is surprising then that several labour force status categories have been under researched in the literature to date. In this paper, using a sample of Irish adults carried out in 2001, we extend the current literature to examine the impacts of additional labour force status categories on life-satisfaction based on International Labour Organisation (ILO) classifications. These include part-time employment, disconnection from the labour force and being disabled, unable to work. Additionally, we expand the analysis of unemployment in the happiness literature and examine if the effects of unemployment and part-time employment on life satisfaction are conditioned by gender. Insights show that being part-time employed has a significant negative effect on life satisfaction, particularly for males. Being unemployed is found to have a significant negative effect on well-being, independent of gender and income, but no such effect is found for the local unemployment rate.