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More Education Does Make You Happier – Unless You Are Unemployed

Author

Listed:
  • Bertermann, Alexander

    (LMU Munich)

  • Kamhöfer, Daniel A.

    (Heinrich Heine University Düsseldorf)

  • Schildberg-Hörisch, Hannah

    (Max Planck Institute for Research on Collective Goods)

Abstract

This paper investigates the causal effect of education on life satisfaction, exploring effect heterogeneity along employment status. We use exogenous variation in compulsory schooling requirements and the build-up of new, academically more demanding schools, shifting educational attainment along the entire distribution of schooling. Leveraging plant closures and longitudinal information, we also address the endogeneity of employment status. We find a positive effect of education on life satisfaction for employed individuals, but a negative one for those without a job. We propose an aspiration-augmented utility function as a unifying explanation for the asymmetric effect of education on life satisfaction.

Suggested Citation

  • Bertermann, Alexander & Kamhöfer, Daniel A. & Schildberg-Hörisch, Hannah, 2023. "More Education Does Make You Happier – Unless You Are Unemployed," IZA Discussion Papers 16454, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16454
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    File URL: https://docs.iza.org/dp16454.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    education; life satisfaction; employment status; compulsory schooling reforms; school openings; instrumental variable estimation;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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