Labour Market Policy and its Effects on Subjective Well-Being and Reemployment Stability in Europe

Abstract

This dissertation analyses the effects of labour market policy on subjective well-being and social inclusion of the unemployed as well as employment stability once the unemployment spell is finished. In the first research stage, the treatment effect of participation in the German work creation scheme One-Euro-Jobs on life satisfaction and perceptions of social inclusion are studied using microeconometric panel methods. It is shown that active labour market policy (ALMP) measures can moderate the social exclusion of long-term unemployed and can thus foster their subjective well-being. However, ALMP cannot fully substitute the psychosocial functions of regular employment. In the second research stage, multilevel as well duration analyses show how country differences in well-being of the unemployed and their reemployment stability can be traced back to national differences in labour market policy. Especially the generosity of unemployment benefits is strongly and positively associated with reemployment stability and subjective well-being of the unemployed in Europe.