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19. April 2023

SOEP Brown Bag Seminar

The Economic Determinants of Bitterness – Evidence from Plant Closures in Germany


19. April 2023


Karl Popper Room
DIW Berlin
Room 2.3.020
Mohrenstr. 58
10117 Berlin


Christopher Prömel, Freie Universität Berlin

-- joint with Panu Poutvaara and Max Steinhardt

This study analyzes the determinants of bitterness, which describes a feeling of not having achieved what one deserves compared to others. First, we perform pooled OLS and fixed effects regressions, showing that bitterness is associated with various economic and non-economic factors, whereby the effect of unemployment stands out. Therefore, in the second step, we identify the causal effect of unemployment on bitterness by exploiting exogenous variation from plant closures. Combining matching based on entropy balancing with difference-in-differences estimation, we show that unemployment leads to a substantial and significant increase in bitterness.