Employment Status and Well-Being Among Young Individuals: Why Do We Observe Cross-Country Differences?

Abstract

In this paper we analyse why in some countries the difference in subjective well-being between employed and unemployed young individuals is substantial, whereas in others it remains small. The strength of this relationship has important consequences, hence it affects the intensity of the job search by the unemployed as well as the retention and productivity of employees. In the analysis we are focused on youth and young adults who constitute a group particularly exposed to the risks of joblessness, precarious or insecure employment. We expect that in economies where young people are able to find jobs of good quality, the employment - well-being relationship tends to be stronger. However, this relationship also depends on the relative well-being of the young unemployed. Based on the literature on school-to-work transition we have identified macro-level factors shaping the conditions of labour market entry of young people (aged 15-35), which consequently affect their well-being. The estimation of multilevel regression models with the use of the combined dataset from the European Social Survey and macro-level databases has indicated that these are mainly education system characteristics (in particular vocational orientation and autonomy of schools) and labour market policy spending that moderate the employment–well-being relationship of young individuals.